Return to Thorncliffe Village: Market Performance of Ownership Townhomes in a Mixed Affordable Residential Community

Back in the 1990s, when I was the Director of Housing with the City of Ottawa, I was involved in an innovative, affordable residential development named Thorncliffe Village. The project was an exciting, public-private partnership long before P3s became in vogue in the government lexicon.

Thorncliffe Village was a joint, residential development project started in 1990 between Domicile Developments Inc., a respected Ottawa homebuilder specializing in high quality, infill, residential developments and the City of Ottawa Non-Profit Housing Corporation, which went by the marketing name of City Living and is known today as Ottawa Community Housing. The project was built on 6 hectares (15 acres) at the intersection of Montreal Road and Burma Road in the City’s east end near the National Research Council and the then CFB Rockcliffe. The site also included an abandoned quarry pit.

Map2

The project included 234 units of social housing and 104 of ownership townhomes and market lots targeted at first time homebuyers. City Living constructed 61 stacked townhomes for rent-geared to income. Two additional portions of the site were leased to Communityworks Non-Profit Housing Corporation for a 68-unit apartment building and 20 stacked townhomes and to Glenn Haddrell Co-operative, which built 85 stacked townhomes. The non-profit housing projects were completed in 1992.

Thorncliffe Aerial

Domicile, through a second private joint venture, built the first batch of 51 market townhomes priced from $109,900 to $134,900 in 1992. The remaining lots were put up for sale to other homebuilders. The original plan included condominium townhomes in the northeast portion but, since the condo market went soft at the time, the decision was made to sever the lots for freehold units. However, the local street (Drayton Private) remained under common ownership since it was too narrow to meet the City’s standards as a public road.

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Because of various physical constraints and the overall goal of providing affordable housing, the ownership townhome units were built on narrower lots with frontages between 4 and 4.5 meters (13 to 15 feet approximately) compared to the normal development standard of 5 to 6 meters (16 to 19.5 feet approximately). The narrow lots also required the local / regional government to allow utilities to be built under, instead of alongside, the driveways. The townhomes were also designed as 3-storey homes to accommodate the narrower lots.

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The purpose for revisiting Thorncliffe Village is to examine how the market (ownership) townhomes have performed in the real estate market over time relative to the rest of the City. In particular, I am interested in seeing whether or not the close proximity of these townhomes to the three social housing projects, combined with their physical design features, has potentially impacted on their resale market performance.

Community opposition commonly referred to as the “Not-In-My-Backyard” or NIMBY syndrome has historically plagued social housing projects. This local opposition typically revolves around fears that low/moderate income rental housing projects will result in reduced property values and increased crime etc. In the case of Thorncliffe Village, the total number of social housing units is more than double the number of ownership units.

In addition to the NIMBY factor, the resale values of the ownership townhomes in Thorncliffe Village may also be impacted by their physical or design features. For example, the narrow floor plans of the townhomes on narrow lots may be less desirable features to potential homebuyers. The common perception would then be that the combination of NIMBY and, to a lesser degree, physical design elements would result in a weaker competitive position of the ownership townhomes in Thorncliffe Village in the real estate resale housing market over the long term, when compared to the rest of the City.

It is useful to note that the real estate agents’ descriptions of homes recently sold in Thorncliffe Village, not surprisingly, make no reference to the presence of social housing projects in the community. One home sold on Drayton Private in 2014 was described as a 3 storey home in a “sought after location” backing onto the former Rockcliffe military base – the “future home of Ottawa’s 1st sustainable community”. A townhome sold on Provender Avenue was advertised as being able to walk to NRC, CMHC, and Montfort Hospital and “nestled in a quiet enclave”. Another home was described as a “great starter home in a family oriented neighbourhood”. Ottawa Community Housing’s describes its social townhouse project, Thorncliffe Court, as being located in a “close knit community” and a “short bus ride to the shops and cinema on Ogilvie Road”.

Example of Recent MLS Listing in Thorncliffe Village

KEEPER MLS Description 1_2

Comments on Data Sources and Methodology

In my analysis, I compare three housing market performance indicators widely used by housing market analysts: selling price of re-sale homes (in this study, townhomes), days on the market, and the ratio of selling price to asking price. The statistics were obtained from the Ottawa Real Estate Board’s MLS® database over a 14-year period between 2000 and 2013. The housing indicators were collected on annual basis for both Thorncliffe Village and the City of Ottawa (excluding Thorncliffe Village) in order to establish comparative performance benchmarks. All the resale values are shown in current or nominal prices i.e. no adjustment to the selling prices was made for inflation.

Since all the townhomes in Thorncliffe Village are 3 storey units, the housing data were also collected for 3 storey townhomes for all of City in order to compare market performances for the same type of home. However, the MLS database only provides statistics for 3 storey townhomes starting in 2003 and the analysis presented below has been adjusted accordingly.

Given the relatively small total of ownership townhomes in Thorncliffe Village, the number of observations in terms of homes sold during any one year will also likely be very small for some years. This means that indicators like average annual selling prices or year-to-year percentage changes, for example, can be influenced by one unusually high (or low) priced sale. Years with few sales may also result in misleading annual measures when compared to other years. In interpreting the results of the research, I focus on long term trends as opposed to year to year changes.

Finally, the terms townhomes and rows are used interchangeably in this study. The MLS data base uses only rows to describe this form of housing.

Research Results

According to MLS database, there were a total of 110 sales of townhomes in Thorncliffe Village, including homes that sold more than once, over the 14-year period from January 1, 2000 to December 31, 2013. The busiest year was 2005 when 16 homes resold compared to the quietest year in 2010 when 4 units resold. Indeed, the turnover in townhomes has remained relatively low over the last 4-5 years. The following table summarizes the townhome resales by year and street.

Total Row Units Sold in Thorncliffe Village by Year by Street: 2000-2013

Chart 1

The following table compares the average prices of townhomes sold in Thorncliffe Village and for the City of Ottawa in total over the 14-year period and for 3 storey townhomes since 2003. Resale prices for 3-storey townhomes were not available as a separate category from MLS prior to 2003.

Comparison of Average Selling Prices (Annual) of Rows: 2000-2013

Chart 2

It is useful to note that the average selling prices of townhomes in Thorncliffe Village have remained below the average for the City and significantly below the average City-wide price for 3 storey townhomes. However, the lower prices cannot simply be attributed to their proximity to social housing. Instead, the lower prices reflect the fact the townhomes were originally built as affordable housing targeted at first time homebuyers. In the case of 3 storey townhomes, for example, 3 storey townhomes in the rest of the City are most likely to be located on lot sizes more typical for this form of housing and therefore will tend to be larger in terms of living space. In comparison, the townhomes in Thorncliffe Village are more modest in total living space, and were built on three floors to accommodate the narrower lots.

The next table compares the percentage changes in average resale values over selected time periods.

Comparison of 14-Year and 11-Year Percentage Changes in Annual Average Resale Prices: Thorncliffe Village vs Rest of City of Ottawa

Table 3

The average annual selling price for townhomes in Thorncliffe Village increased by 120.4% between 2000 and 2013, just below the 121.6% increase for the rest of the City of Ottawa. Since 2003, the Village’s average values for townhomes increased at a slightly greater rate compared to the rest of the City over the 11-year period – 63.0% compared to 60.9%. The rate of increase was even greater in terms of 3-storey townhomes, the only type of freehold townhomes in the Village. Thorncliffe Village also displayed a strong market performance since 2010 with price increases exceeding the rest of the City especially for 3 storey townhomes. As observed earlier, the last four years in Thorncliffe Village were also characterized as having fewer sales compared to previous years

The following chart illustrates the trend in annual average resale price indices for both Thorncliffe Village and the rest of the City (all townhomes). The indices measure the changes over time in the annual average selling prices of townhomes relative to the start point of 2000 which is the reference year equaling 100. Notwithstanding the occasional wide year-to-year variations such as between 2008 and 2009, Thorncliffe Village’s resale price changes have closely followed the City’s trend line over the long term.

Average Resale Price Index for Townhomes (2000 = 100) Thorncliffe Village vs Rest of the City of Ottawa: 2000-2013

Chart 3

The next chart shows the same resale price index but this time showing 3 storey townhomes sold in the rest of City of Ottawa as well as Thorncliffe Village. Since resale price data for 3 storey townhomes are not available prior to 2003, the index is based on 2003 equaling 100. The interesting point to be made from this graph is that annual average resale prices of 3 storey townhomes in the City of Ottawa have leveled off from about 2011 and indeed declined between 2012 and 2013. In contrast, average resale prices in Thorncliffe Village have maintained relatively strong positive gains ever since 2009.

Average Resale Price Index for 3 Storey Townhomes (2003 = 100) Thorncliffe Village vs Rest of the City of Ottawa: 2003-2013

Chart 4

The following table compares average days on the market (how long it took to sell the home), average cumulative days on the market (includes homes that were taken off the market and then relisted) and the average ratio between selling price and asking or listed price expressed in percentage terms. Over the 14-year period between 2000 and 2013, townhomes in Thorncliffe Village’s market performance closed matched the rest of the City, for both all types of townhomes and 3-storey rows, in terms of average days on the market (how long it took to sell a home), average cumulative days on the market (this includes homes that have been taken off the market and then re-listed) and average ratio between selling price and asking or listed price expressed in percentage terms.

Once again, the performance indicators in the table support the findings made from the analysis of townhome prices. The real estate market performance of townhomes in Thorncliffe Village has closely following the rest of the City and indeed has outperformed the City’s 3 storey resale values over the past 3 to 4 years.

Comparison of Selected Resale Market Performance Indicators: Thorncliffe Village vs Rest of City of Ottawa

Table 4

Conclusions

The results of the above analysis of resale housing market trends indicate that, in the case of Thorncliffe Village, the presence of social housing in the community has not negatively impacted the real estate market performance of ownership townhomes compared to the rest of the City. This finding is particularly significant since the social housing units represent almost 70% of the total number of units in the Village. During the 14-year period between 2000 and 2013, the competitiveness of Thorncliffe Village’s ownership townhomes has equaled or exceeded the market performance of townhomes, especially 3 story townhomes, in the rest of the City.

Furthermore, the results of the analysis indicate that the design features and relaxed development standards also have not weakened the marketability of the homes over the study period. Moreover, the ownership townhomes are now over 20 years old. Their strong market performance also suggests that owners have invested in the renovation and maintenance of their homes which in turn reflects the attractiveness of Thorncliffe Village as a desirable, affordable community to live.

The methodology used in my study was wholly based on a statistical analysis of MLS data. A useful next step would involve interviewing existing townhome owners in Thorncliffe Village as well as other community stakeholders in order to gain human perspectives on the quality of life in the community and the need for affordable entry level housing. The results of such feedback would also provide important validation of the statistically derived conclusions.

My analysis also only focused on one mixed affordable housing project. Thorncliffe Village is relatively unique in that both the social and market housing units were constructed at the same time designed as part of an integrated community. Most new social housing projects constructed in the peak years of federal and provincial program funding years during the latter 1980’s and early 1990’s were built in established neighbourhoods which in turn may result in different intensity levels in terms of NIMBY reactions. Further analysis would be required to examine the housing market impact of social housing projects on surrounding neighbourhoods / property values taking into consideration factors like the type of social housing such as density (high rise versus townhomes), income mix etc., characteristics of surrounding neighbourhoods with respect to geographic location (downtown / inner city vs more outlying or suburban areas), proximity to jobs and other factors.

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