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Wednesday, July 13, 2016
Egan: Number of million-dollar houses in town up 30 per cent in one year
In 2005, there were 319 properties in Ottawa with a market value assessed at $1 million or higher. This year, the total is almost nine times higher, at 2,702 — and that figure is probably an underestimate.
In the last year alone, the number of million-plus properties has jumped 30 per cent and there’s little sign the trend is ending.
A valuation for tax purposes is not the same as sales data, of course, but even there the arrow is headed north. According to the Ottawa Real Estate Board, there were 135 properties that sold for a million dollars or more in 2015, including two condos.
In the first half of 2016, there were 78, including three condos.
The biggest chunk of the city’s $1-million-plus portfolio is in Rockcliffe but Capital ward, which contains the Glebe, is not far behind and the numbers have risen most dramatically in Kitchissippi (blame Westboro) and Osgoode (parts of Metro Manotick), which have gone from single digits to well over 200 in 10 years.
Million-dollar houses are now so common — even on ordinary, middle-class streets — we’re losing the capacity to be surprised.
There was a time when Michael Cowpland, the high-tech tycoon, made front-page news for putting his country mansion, Stoke Lacey, on the market for $2.5 million.
As we speak, there’s a house in Chelsea on the market for $5 million, causing nary a stir. A quick check on MLS, in fact, found 250 listings at $1 million or higher. So much for sticker shock.
Pity the young couple with a white-picket dream at the moment, because a little wooden fence is about all they could afford in central Ottawa, where $400,000 pretty much gets you a tiny tear-down.
But lest we think it’s all gone wacko, the experts remind us that the important thing to keep in mind is not the raw number with all the zeroes but the concept of affordability.
There used to be a saying that a good suit costs a man about a week’s wages. Similarly, a house used to be considered affordable if the sale price was about three times the annual household income. The median family income in Ottawa-Gatineau is about $105,000, while the average sale price of a house in the city in June was $399,000, so things aren’t horribly out of scale, as they are elsewhere in the country.
In Toronto, the house-price-to-income multiple is nine or 10 or even higher — depending on the neighbourhood — while in Vancouver, it’s even greater. No wonder there are worries about sustainability and bursting bubbles.
Some of it already seems impossible. Saturday’s Homes section, for instance, gave me a start. Listed was a house on Cooper Street where my childhood buddy Barry used to live.
We didn’t think the house was anything special then. Of course, we didn’t think anybody’s house was special. It was the 1960s in Centretown and we lived outside like street rats anyway, before cable TV ruined everything.
Canada Mortgage and Housing Corp. does surveys on new home construction in several Canadian cities. For new builds (homes and condos), the average price paid in Ottawa in 1997 was $183,650. In 2014, for the first time ever, the average price broke through the half-million-dollar mark, settling at $514,963.
The market may have taken a breather, as the CMHC survey for May 2016 puts the figure at $505,127 for a single detached.
The cost of inner-city housing is really the cost of land. And this is the worrisome part. Policies of urban intensification have made central land so expensive that, not only do small businesses have a tough time finding affordable space, but try putting a big grocery store in the older parts of the city right now. Nearly impossible.
And this creates a quandary for older people on fixed incomes living in the same homes long after the kids are gone. It’s the same house, more or less, but a market-value-based system has driven each fresh assessment — and the subsequent taxes — sky high.
There will be more news on the million-dollar front soon. The city provided its numbers to the Citizen based on data from the Ontario Municipal Property Assessment Corp., which does actual assessments every four years, the latest being 2016.
So a fresh batch of numbers is due later in July. And millionaire’s row? Look for it to get longer and, for many, further out of reach.