From announcement to operation: The changing impact of light rail transit on housing prices across implementation phases

New public transit infrastructure can significantly influence housing prices. While most studies examine impacts only after construction or compare a limited number of implementation phases, little is known about how transit-induced property value capitalization evolves dynamically throughout the implementation process. This study investigates the impact of Montreal’s new light rail project (the REM) on housing prices across four stages: announcement, construction, testing, and initial operation. The phased implementation of the REM also allows us to examine whether the operation of one branch generates anticipatory price effects along branches that remain under construction. Drawing on panel data of 14,711 residential property transactions over eleven years (from 2013 to 2023), we employ a natural experiment design through a difference-in-differences (DiD) approach to isolate the project’s net effect at different stages on housing prices. Our findings show that the four stages of REM implementation affect property values differently across catchment areas along operating and non-operating branches. The project announcement raised housing premiums within 800 m of some parts of the corridor, and this effect persisted throughout the construction period. REM-related premiums around the branch that underwent testing remained positive throughout the construction period. However, during testing and early operation, these gains were largely offset, possibly due to operational impacts such as noise and vibration. While premiums dissipated near the operating branch, properties along unopened branches remained stable or continued to appreciate compared to the rest of the region. By highlighting how home values evolve across different stages of implementation of large-scale transit investments, this study provides insights that can inform the design of Land Value Capture policies to capitalize on property gains while mitigating externalities.