First, the disclaimer: my views about this are my own, not those of Royal LePage, or the Ottawa Real Estate Board, or any of the professional realtor associations I belong to. I could be totally wrong.
But here’s my take on the Ottawa condo market.
I think there is an oversupply of condos in downtown Ottawa which is not yet completely reflected in price. Prices are already coming down, yes. But there will be a spate of brand new condos in the downtown core released over the next year or so, and that will have a further depressing effect on prices, particularly for older condos.
Those older buildings were constructed in the seventies, eighties and nineties, which means they’re all due for major repairs, and that can add up to huge special assessments. Because they’re bigger units than new construction, once all those repairs and facelifts are finished, they’ll be good buys and I think they’ll recover. But it’s going to take a while before the boomers, who are looking for more square footage, are ready to downsize. And so I think for the next couple of years, condo owners in downtown Ottawa are going to take a hit.
The rental market is going to soften a little bit too, because as the condo prices come down, investors will drop their rental prices. A buyer’s market is often a renter’s market too.
What areas do I think will do well despite the slowdown?
Orleans is one. The eastern extension of the LRT is supposed to create 20,000 new jobs . A lot of those workers will come from other parts of the province, and they’ll need places to live. I think they’ll rent, rather than buy, and they’ll probably share. So a condo townhouse in Orleans might be a pretty good investment for someone who doesn’t mind being a landlord.
Tunney’s Pasture is another. A huge development is planned there over the next decade or more. The area around it gets better all the time, as it is: when the feds implement their plans, I think we’ll see a development that’s a lot like the one on Preston Street, where there was a mixture of commercial and retail that reinvigorated that whole area. There are new condo buildings going up all over the place, which will add inventory, but this is one part of town where I think the market can absorb the new spaces.
Some people think the newer condos will make it harder to sell the ones in older buildings, but I disagree. There are great deals to be had in older buildings on Holland and Parkdale right now, and you can’t beat the location. Every now and then a unit comes up on Burnside, Forward, or Emmerson, which is close to the parkway and the Indonesian embassy. If I had the cash, this is where I’d buy, and I’d do it now, while prices are down.
The third area I think is underpriced relative to market is Amberwood in Stittsville. These are condo row bungalows (some detached) right along the golf course. The units are big: most are around 2,000 sq ft of living space, and that’s another area that’s building up in terms of shopping. The golf course’s clubhouse has nice amenities for retirees: a pool, a bridge club, and yoga.
And price-wise; there’s nothing in the city to come close, once you do some comparison shopping in Stonebridge or Kanata Lakes. There’s one detached condo on the market in Amberwood at $ 414,900, that with a bit of work could really pay off for the right buyer: it backs right onto the golf course. So what if it needs a new kitchen and a little updating? The view is gorgeous.
Now I was at a meeting late last year where CMHC predicted that prices would fall in Orleans and Stittsville, while the downtown core would hold firm, as the first time buyers moved into the downtown core. Stittsville did soften. But first time buyers, I think, will go to Orleans rather than pay the high prices in the downtown area: prices would really have to come down a lot before they’ll see downtown condo units as providing value for money. They don’t make a lot of money yet, and they work hard, and I find they’re savvy, prudent shoppers. Plus they like having a little patio where they can BBQ. For them, the condo townhouses work perfectly.
Which means that Ottawa’s condo market is a bit of a mixed bag right now. If you’re thinking of buying, be sure to have a realtor’s input and guidance. There are some great deals around, and some great investments for the future.