Saturday, December 4, 2010

Home price increases inside the Greenbelt outstripped their suburban and rural counterparts

I am not usually that big on posting articles, but I thought this one was very timely and important. 

Just a comment on this, from 1989 to 2001 Ottawa houses went up $22,056.00 or about 12.5% total.  So, cumulatively, over the past 20 years, houses in Ottawa are increasing at a normal pace.  From 1989 to 2009, houses increased in value by $183,812 or 2.8% per year.  With the implementation of the GST and a focus on paying down the deficit in the 1990s, some of the run up in the 2000s has been reflective of the stagnation of the 1990s.

Golden neighbourhoods
By Robert Bostelaar, Ottawa Citizen December 4, 2010 •Story•Photos ( 4 )

Ottawa Citizen, Ottawa CitizenHomes within the Greenbelt -- and especially in some key Ottawa neighbourhoods -- gained far more value in the past decade than their suburban and rural cousins, a City of Ottawa analysis reveals.  And the appreciation gap could widen further as city intensification policies and downsizing boomers bring more people into central Ottawa.

The downtown price surge, which Ottawa shares with many other North American cities, won't be a surprise to anyone who watches real estate ads. But the City of Ottawa data, presented to a Canada Mortgage and Housing Corporation conference last month, reveals both the extent of gains and which areas are hottest.

Across Ottawa, the value of the average home rose 92 per cent between 2000 and 2009, city planning official Court Curry told the conference. That increase pushed the average price to $321,267 from $167,246 -- well above the decade's cumulative inflation rate, which is pegged by the Bank of Canada at 21.6 per cent.

Some neighbourhoods far surpassed the average rise.
Westboro, the trendy Richmond Road district that is home to bike shops and bakeries, old houses and new condos, was the biggest winner, pushing up average prices by 164 per cent. The average price in Westboro jumped to $457,253 last year, from $173,414 in 2000.

Courtland Park-Rideau View, a neighbourhood south of Baseline Road and east of Fisher Avenue, was second with a 159-per-cent rise in values, taking the average price to $336,626 from $130,208.

Next was Chinatown-Little Italy-Mechanicsville (157 per cent) and two Westboro neighbours: Wellington Village (155 per cent) and Highland Park (129 per cent).

Even Vanier, a mixed commercial and residential district east of downtown that has earned its share of negative press, appreciated more than the Ottawa average, at 129 per cent.

So if these areas appreciated more than the average, which neighbourhoods came in below the 92-per-cent figure? Neither the city nor the Ottawa Real Estate Board, the source of the data, would say.

Given the close-to-the-bull's-eye positions of the big gainers, however, it's probably safe to assume that the slower areas are in the outer rings of the amalgamated city.

Curry was willing to predict which areas could show the biggest increases, residential and commercial, in the coming decade. These neighbourhoods line Ottawa's planned light rail transit (LRT) route, of which the first phase, from Tunney's Pasture through downtown to Blair Road, is expected to begin operating by 2019. The line will tunnel under central Ottawa and have 13 stations.

A projected annual ridership of 76 million, almost double the ridership on the current bus transitway, should spur "significant positive effect on the value of lands around stations," he told the conference.

Even before LRT construction starts in 2013, a boom in condominium projects, spurred by the city's housing intensification strategy, is encouraging young professionals, baby boomers who have consolidated their households, and others to live downtown.

Within two blocks of Rideau and Cumberland streets, for example, 1,200 housing units are under construction or completed and another 670 are planned, boosting the area population by 3,100.  "That's the equivalent of the town of Almonte," Curry said.  Some 2,100 units are under way or complete in the downtown-Centretown district, with another 2,000 units planned. In Westboro, 505 units have been added and another 1,110 are proposed.  Still another hot area is Little Italy by the Carling station for the O-Train, forerunner to Ottawa's LRT service. There, 725 new dwellings will accommodate as many as 1,200 incoming residents, while new office and retail space will provide up to 1,650 jobs.

"We really think that Little Italy and the whole Somerset (Street) area is a sleeper," Curry said.

The general rise in property values is good news for homeowners, less good for buyers -- especially first-timers facing increasingly high initial and monthly payments to get on the property ladder.  Ottawa broker Pierre de Varennes, however, suggests that wage hikes in the past decade have helped buyers keep pace with the price increases.  As well, with a six-decade record of steady but moderate increases in resale values, Ottawa remains the second least-expensive large Canadian city in which to buy a home, he noted in an interview. Montreal is the cheapest.  "From that perspective, Ottawa tends to be a relatively safe place to invest in home ownership, relative to some other Canadian cities," said de Varennes, who just completed a term as president of the Ottawa Real Estate Board.   "We're not vulnerable to the large swings as may be seen in, for example, Calgary, Edmonton, Toronto, Vancouver."

As in other cities, he says, the downtown should continue to be desirable to older buyers who want to be in walking distance of shops -- especially if they have health problems that could limit their ability to drive in coming years. Others are simply tired of daily traffic jams.  "They're willing to pay a little more for convenience -- the time-savings. Certainly there are people who have moved in from the periphery, and that may allow them to go from two cars down to one, or three cars down to two."

For first-time buyers seeking a "starter" home, rising downtown prices could steer them to neighbourhoods outside the Greenbelt, where larger townhouses or even single-family homes are attainable.  More affluent first-timers, "especially if they're being helped by mom and dad," tend to gravitate to the downtown.

"They tend to be young professional people. They're not necessarily, in their first property, interested in mowing the lawn, that sort of thing, because they're focused on their career.   "They're looking to be closer to the nightlife, the activities, and be in a condo," said de Varennes.

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