View this great article published in the Ottawa Citizen on Saturday August 15th, where I talk about the current condo market and what's to come in the future.Big or small? Cheap or pricey? Young or old?
By Patrick Langston, The Ottawa Citizen
For a town with a reputation for staid predictability, Ottawa is anything but when it comes to the condo market. One minute boomers aren't buying, the next they're tripping over each other to sign on the dotted line.
Ask builders about the much-touted trend to smaller units and they'll nod in agreement before throwing out enough exceptions to fill a gleaming condo tower. Makes you wonder if a Ouija board wouldn't work as well when it comes to defining the market.
We do know condo sales, after a recession-driven slowdown that hit the entire housing market, are healthy. According to the PMA Realty Group, May sales of apartment-style condos represented 12.8 per cent of new home sales, jumping to 13.6 per cent in June. July figures aren't yet available, but builders say they were good. July resales were up a record-breaking 7.6 per cent over 2008, according to the Ottawa Real Estate Board.
Thing is, no one seems to know who's going to be plunking down cash for condos or exactly what designs they'll want.
A recent weekend found empty-nesters surging through the sales office at Ashcroft Homes' 101 Richmond Road project, a chic glass-and-brick building planned in super hot Westboro.
The demographic caught sales representative Patti Bourassa "completely off-guard. Before then, it was nearly all 25 to 35 year-olds," she says. That weekend, boomers were snapping up 1,000-square-foot apartments after months of holding off on condo purchases.
"They know the inventory is limited, and maybe they have realtor friends who are saying, 'Sell your house now for a good price.' "
Boomers were the hardest hit buyer group this winter because their investments deflated and they were seriously afraid prices for their homes were also going to shrink.
The fear factor is gone, says Bourassa. "I heard some of them saying, 'I can't believe the price of condos. If I don't buy now, who knows what will happen in two years?' "
"Sometimes with trends, you try too hard to find the reason," says Ashcroft president David Choo. "There are shifts in the market and there's nothing you can do about it. There's no science about coming to the market; you're not saying, 'I know that's what's required.'"
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Brenda and Ian Miller, longtime Orléans residents and married 48 years, recently bought a 1,000-square-foot corner condo at 101 Richmond Road. At Brenda's urging -- she's known to many as Brenda the Psychic and says she immediately "felt something very strong" about the site -- the couple bought within 20 minutes of entering the presentation centre.
Her husband, a Saskatchewan native now retired from the Royal Canadian Mounted Police, is looking forward to the condo's proximity to bike paths and kayaking opportunities at Meech Lake. As well, he says, "the last few years, I've been missing that village aspect."
The Millers, like the other boomers who have flocked to 101 Richmond, may have been the exception that proves the rule. That rule, says Ron Desjardins, vice-president of PMA Brethour Group, states that young singles and couples, primarily professionals, are the major buyers of condos, mostly smaller ones.
In Ottawa, that trend was ignited a few years ago when Toronto-based Urban Capital Property Group opened the first tower at East Market. The small condos, priced at $99,000, appealed to young, first-time buyers. There are now three towers with mostly modest size units, although there are larger condos with spectacular views of the Ottawa skyline. Urban Capital followed up East Market with the Mondrian, a sleek condo that has risen at the corner of Bank Street and Laurier Avenue and, most recently, Central on Bank Street at Gladstone, a launch that sparked a feeding frenzy of buyers, many of them young.
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Young buyers have been snapping up condos partly because prices have been stable and interest rates low, says Desjardins. Now, like the rest of the market, they're getting even more active. "There's talk that interest rates could see a bump, and they're seeing builders reducing the number of incentives," says Desjardins. "Also, builders discounted units through the winter and now they'll try to recover their margins. Even some drywall and toilet costs are increasing because manufacturers shut plants in the recession and now the inventory is tight.
"(Buyers) are seeing the window of opportunity to get the best deal getting tighter," says the veteran analyst.
Kristina Johnston is one of those young buyers. The 28-year-old, who runs a medical centre, bought an 800-square-foot condo at Westboro Station Phase II on the western edge of Westboro. The building, which will be ready in 2011, is being developed by Ottawa's Bourk Family Developments, and the 800-square-foot apartments were swiftly snapped up, especially by first-time buyers.
"I definitely checked out the condo market in Ottawa," says Johnston, who currently rents in Wellington West. She settled on Westboro Station in part because of the layout and size, and because she likes the neighbourhood's atmosphere and proximity to the Queensway.
But if young, first-time buyers dig Phase II at Westboro Station, which is 55 per cent sold, the average age of buyers in Phase I was reportedly 51. Go figure.
Buyers are all over the map, says Doug Casey, president of Ottawa's Charlesfort Developments. "Small is popular, but large is too. It all depends on the location and quality." Cosy, 460-square-foot condos in Charlesfort's downtown project, Hudson Park II, have sold well, but so have the building's larger apartments.
And, of course, there's the ultra-luxurious Metropole by Minto off Scott Street near Island Park Drive. Opened in 2004, its top-end units run well over 3,000 square feet.
On the other hand, Domicile Developments Inc. had a heck of a time selling its bigger, two-storey condo at G in the Glebe. The company finally chopped the units down and has since sold most of them. Its latest project, Second Avenue West on Bronson Avenue at the western limits of the Glebe, contains more units in the 600-square-foot range.
"It's an affordability issue," says Domicile president John Doran. With construction costs running $400-a-square-foot and more, the only way to keep units affordable is to shrink them. At the same time, Doran says older buyers expect fine finishes, while younger ones look for appliances as part of the package, neither of which comes cheaply. And it seems most buyers are looking for amenities, including exercise rooms, while nobody wants high condo fees.
Just to muddy the picture further, Doran says his company is looking at a Wellington West site where it may ramp up condo sizes again.
When it comes to living small, Ottawa architect Barry Hobin, whose projects include Hudson Park and Westboro Station, says he's seen a downward trend in Ottawa from over roughly 650 square feet to about 550 square feet.
Everything shrinks, he says. "Bedrooms are 10 feet wide instead of 12. The newest trend is that the dining room disappears and instead there's an eating island in the kitchen." Bigger windows and condo-scaled furniture, he adds, can go a long way to creating the illusion of spaciousness.
Ottawa still has a way to go in the incredible shrinking condo game.
Here, says Choo, a 600-square-foot condo would be considered small. In Toronto, it's mid-sized. "The whole condo experience is evolving. Designers are becoming more innovative in how they design small units, and builders are more innovative in how they present them."
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Condo living, big or small, has become stable part of the Ottawa marketplace. Condo sales have represented about 10 per cent of total new home sales during the first six months of each year since 2006, according to the Greater Ottawa Home Builders' Association. Resale figures from the Ottawa Real Estate Board, meanwhile, show condos representing 20 per cent of total home sales this year.
These numbers are radically different from the roughly two per cent of the Ottawa market that Marnie Bennett says condos represented only seven years ago. That's when the Keller Williams Ottawa Realty broker started selling condos here.
"We're not at the peak yet," she says. Case in point: runaway sales when the presentation centre for Mastercraft Starwood's 15-storey SoHo Parkway, planned for the corner of Parkdale Avenue and Scott Street, opened last month. Virtually all of the units, which run from 508 square feet to the $1.2 million, 2,779-square-foot penthouse, are being held in reserve for prospective buyers, Bennett says. She expects the vast majority of the sales will be completed.
"Everyone wants to travel now. We want to be surrounded by the finer things, be pampered and get the lifestyle we couldn't get in a single family home." Buyers, she says, are looking for nine-foot ceilings, marble bathrooms and the like. Ottawa architects and designers, meanwhile, are becoming more sophisticated in response to buyer expectations.
And Ottawa buyers can be a discerning lot, says Bennett. "There's much more informational sales here. People in Ottawa will call city hall and check up on all the little details of a project. We're research geeks."
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