More lower-priced condominiums are expected to be developed in downtown Ottawa over the next few years due to the demand for more affordable housing from first-time homebuyers, according to a senior market analyst with the Canada Mortgage and Housing Corp.
“We’ll see a shift from higher-priced condos into less-expensive condos, and this will be driven by the first-time homebuyers,” Abdul Kargbo said at a CMHC housing outlook conference earlier this month.
“We’ll definitely see an increase in demand in downtown, but what we are equally going to see is the shift (in price range),” he added.
Kargbo says new tighter mortgage rules from the federal government, combined with a relatively flat economic environment will lead to fewer higher-priced condos being built and purchased downtown.
First-time homebuyers are looking for cheaper options so they will choose condos and possibly town houses instead of more expensive single homes, Kargbo says.
This shift should reassure critics who have expressed concerns over the flight of young families from downtown to more affordable housing in suburban areas.
“There is a shortage of affordable housing units in Centretown and it’s been a long-standing issue,” says Ray Sullivan, executive director of the Centretown Citizens Ottawa Corp. “The balance has tipped over the past few years and the housing mix in the area has become out of reach for many.”
Sandra Perez, the CMHC senior market analyst for Ottawa, says the development of less expensive units will accommodate the greatest proportion of new owners who are between the ages of 25 and 34.
Ottawa has seen more young adults moving to the city than any other age demographic. Buyers in this demographic have an average household income of $79,900 according to CMHC. Kargbo says this age group will push the home-buying trend.
Ottawa University student Ravneet Bhogal says she is excited about the prospects of more affordable housing downtown.
“I’d love to be downtown, closer to school, work and social stuff, but like many students school has strained my finances and downtown is way too expensive,” she says. Bhogal currently lives in Barrhaven where living costs are cheaper.
Bhogal says that although she is likely a few years away from home ownership, she'd like to eventually settle downtown.“I hope the prices do shift.”
According to MLS statistics, the average cost for condos sold in downtown Ottawa in 2011 was $366,045. Units on the lower end up the spectrum hovered around the $200,000 mark.