A new report from consulting firm PricewaterhouseCoopers and non-profit think-tank Urban Land Institute has highlighted how homebuyers who are increasingly choosing to live downtown instead of in the suburbs are affecting the Canadian real estate market.
“Once viewed as an emerging trend, urbanization today is simply the ‘new normal’,” says the report.
The trend of young professionals buying condos in the central areas of cities has raised concerns about the impact of redevelopment on existing communities, and the long-term fate of these dwellings if the current owners eventually retreat to the suburbs.
“Eventually the downtown core will expand,” says Sandra Perez Torres, a senior market analyst for Canada Mortgage and Housing Corporation(CMHC). “The price of the land will be more expensive and it makes sense to build upwards. Residents may be hesitant, but it is a trend that will happen.”
The report, Emerging Trends in Real Estate 2015, explains that the high demand for space in city cores has blurred the line between commercial and residential development and has led to new opportunities in mixed-use properties.
“We used to see primarily single bedroom units downtown,” says Randy Oickle, president of the Ottawa Real Estate Board. “Moving forward, we will see three-bedroom and four-bedroom units to accommodate desired size,” says Oickle. “People who were not typically seen as buyers now are.”
And while Ottawa follows the increase people of moving and staying downtown, many of those working in Centretown continue to be commuters.
“Each market is different,” explains Ottawa realtor Russ Perkins. “For people who work downtown in Ottawa, they can commute to work from Kanata, Stittsville or Barrhaven in 30 minutes on a good day of traffic and maybe up to an hour on a bad day. The same may not be true for other major urban cores.”
And transportation in the city only continues to speed up.
Ottawa’s market is being driven by two major factors according to Emerging Trends in Real Estate 2015; the Light Rail Transit (LRT) project creating a boom for local construction firms and soft employment figures.
“More than $360 million in contracts have been committed to Ottawa firms so far, and the majority of contractors working on the downtown LRT tunnel and other first-phase projects are from the region,” says the report.
While Ottawa works to improve its transit system, it continues to boast a quicker commute than many of the other cities mentioned in the report–something that makes Ottawa’s urbanization unique, says Perez Torres.
“Ottawa is a smaller city. With a population close to a million, the result is faster transportation,” she says.
The quick commute is a major reason that it is still more common in Ottawa to live in town homes or the suburbs, according to Oickle.
“Living in downtown Ottawa is more of a lifestyle choice right now,” he says. “Instead of travel necessity, people can choose to live downtown where they can walk or take public transport.”