The general aim of this posting is to examine if proximity to social housing projects located in the inner city neighbourhoods of Ottawa comprised of Centretown, Sandy Hill and Lowertown has a potential negative market impact on downtown condominium projects. My analysis here is similar to the objective of my previous blog on Thorncliffe Village where I examined whether or not the close proximity of ownership townhomes to social housing had a negative impact on their resale market performance.
The housing market in Ottawa’s inner city neighbourhoods, as in other large Canadian cities, has experienced quite dramatic changes in terms of its demographics and real estate development trends in recent years.
During the 1980s and until the mid-1990s, the sources of investment in new major housing projects in Centretown came primarily from social housing providers and in particular, the City of Ottawa Non Profit Housing Corporation (now called Ottawa Community Housing or OCH) and the Centretown Citizens Ottawa Corporation (CCOC). Social housing construction levels peaked during this period as a result of funding available from the federal and provincial governments. Since singles and lower income renter households, dominated Centretown’s demography, new social housing projects generally faced less community NIMBY (Not-In-My-Back-Yard) opposition.
The new millennium brought in an unprecedented boom in new housing construction in Ottawa’s inner city neighbourhoods in the form of high rise condominiums, a trend experienced in every large city in Canada. The exponential growth in the demand for downtown condominium housing has been attributed to the aging of the baby boomers as their retirement numbers increase and begin to downsize and to the attraction of downtown amenities and proximity to work for young professionals and childless couples.
As an interesting sidebar note, Ottawa’s largest downtown condo builder and new home construction company overall, Claridge Homes, was also a key builder of social housing projects in Centretown during the 1990s which provided Claridge a valuable ‘training’ base for downtown residential development.
It is also useful to note that City Council approved the exemption of Development Charges (DCs) in 1994 to stimulate residential development and intensification in the downtown neighbourhoods. In 2000, the exemption was expanded to include all planning application and building permit fees as well as the 5% parkland levy (for residential developments of 50 units or less). The DC exemption was discontinued on August 1, 2011. The total value of all exemptions for just a 15-month period between May 2000 and August 2001 was $3.6 million (Canada Mortgage and Housing Corporation, “Residential Intensification Case Studies”: undated (http://www.cmhc-schl.gc.ca/en/inpr/su/sucopl/sucopl_002.cfm ). Between 2004 and 2011, the City had waived $9.2 million in development charges related to downtown residential development (Canadian Urban Institute, “The Value of Investing In Canadian Downtowns”: May 2012 http://www.canurb.org/cui-publications/the-value-of-investing-in-canadian-downtowns.html).
The following chart shows the historical trends in annual apartment housing starts by market type (rental and condominium) on an annual basis from 1980 to 2013 for the Ottawa Census Metropolitan Area (CMA – excluding the Gatineau, Quebec part). The rental and condominium apartment starts data are only available from 1990.
Annual Rental and Condominium Apartment Starts: Ottawa CMA 1980-2013
Apartment construction starts displayed relatively high levels of activity during most of the 1980s and early 1990s, which was most likely due to new rental housing construction and in particular, to the active social housing rental funding programs available during this period. After 1992, the new apartment construction market virtually disappeared after the cancellation of the social housing programs. The mid 1990s was also a period of significant federal government cutbacks in spending and employment in Ottawa. New apartment construction levels remained low for the rest of the decade and into the early years of the new millennium.
Apartment construction activity then started to gain momentum with condominiums dominating the market especially after 2002. By 2012 and 2013, annual apartment starts exceeded 2,500 units for both years, with condominium ownership accounting for the majority share. Unlike the mid 1990s, the federal government’s budget spending reductions and employment cuts that followed the 2008-09 ‘Great Recession’ which have continued in 2013, appear to have a lesser negative impact on the local housing market at least in terms of new apartment/ condominium construction.
The following set of 3 maps show the local of social housing and existing or planned condominium projects in Centretown, Sandy Hill and Lowertown. The maps can also be found on Google Map at the following link. Each map is provided as a separate layer, which can also viewed individually. https://mapsengine.google.com/map/edit?hl=en&authuser=0&mid=z13uiFj8Q_Zw.k-jo_7urW5-U.
The maps only include larger mid- and high-rise residential projects or areas with a significant concentration of social housing. The maps exclude smaller sized projects such as rooming houses, minor infill developments or conversions as well as low-rise condominiums (e.g. 4 storeys or less without elevators).
The place markers on the Google Map layers also contain additional information on the projects. In the case of social housing, the dark red markers are projects managed by Ottawa Community Housing (OCH) and the light red markers are projects managed be other non-profit providers but primarily by Centretown Citizens Ottawa Corporation (CCOC). For the map showing existing condominium projects, the dark blue markers are condominiums built since and including 2000. The light blue projects were built before 2000. Each marker includes a caption showing the name of the project, the builder, number of units and the year built. The third map contains “future” mid- and high-rise condominium projects. The dark green markers refer to condominium projects that are either under construction or are in the pre-selling phase or are “construction ready” in terms of having all their required planning approvals completed. The lighter green are longer term investment projects that are either on hold or require Official Plan Amendments or Rezoning approvals including projects that may be heading to the Ontario Municipal Board.
Distribution of Social Housing In Ottawa’s Downtown Neighbourhoods
Distribution of Mid- and High-Rise Condominium Projects In Ottawa’s Downtown Neighbourhoods
Distribution of Future Mid- and High-Rise Condominium Projects In Ottawa’s Downtown Neighbourhoods
The following general observations can be made based on a visual examination of the 3 maps:
- The largest number of social housing projects shown on the map is in Centretown with 27 place markers compared to 13 east of the Canal. The total number of units is comparable between the two sides – 2,335 in Centretown and 1,931 in Lowertown/Sandy Hill. Four projects in Lowertown/Sandy Hill contain over 200 units – Beausejour-Beausoleil (302 units), 110 Cobourg (MacDonald Manor with 232 units), 380 Murray (230 units) and Strathcona Heights (529 units including townhomes and apartments). There are 2 projects in Centretown with over 200 units – 395 Somerset (Somerset Towers with 250 seniors units) and 415 MacLaren (MacLaren Towers with 250 units).
- Of the total 37 mid- and high-rise condominium projects shown on the map, 20 buildings with 2,687 units are located in Centretown. Condominiums built in Centretown since 2000 are tend to be located within one block of the Bank Street commercial corridor between Kent and O’Connor streets. Older condominium projects built before 2000 are more dispersed in the eastern half of Centretown towards the Canal with a noticeable concentration of projects around the Bay St / Laurier Ave intersection. The more stable residential areas of Centretown located generally towards the western third south of Nepean Street and to a lesser extent, the Golden Triangle on the eastern side have experienced limited new developments in both social housing and condominiums. There are several older low / mid-rise condominiums found around the edges of the Golden Triangle.
- In contrast, condominium project locations on the east side of Rideau Canal display a high concentration around the Rideau Street / Cumberland Street-King Edward Avenue intersections. This area has experienced a large number on condominium high rises built since 2000. The eastern side of the Canal has 17 condominium projects with a total of 2,181 units.
- The future projects map shows a similar distribution pattern except for a relatively greater incidence of projects planned in the eastern half of Lower Town towards the Rideau River.
- The distribution of social housing and condominium projects show two different geographic patterns between Centretown and Lowertown/Sandy Hill. Projects in Centretown are more interspersed and intermixed compared to the east side of the Canal where the condo projects are more concentrated and physically separated from the social housing projects.
For the remainder of this blog, I will examine the potential impact of social housing projects on the market performance of condominiums located in Centretown, Lower Town and Sandy Hill. The corresponding MLS® real estate zones include zones 4101-4104 (Centretown) and zones 4001-4004 (Lower Town and Sandy Hill). I also included zone 4408 in the Sandy Hill neighbourhood (see map below). The real estate zones south of the Queensway were excluded from the analysis.
MLS® Real Estate Zones for Downtown Neighbourhoods
The market performance indicators used are similar to my previous posting on Thorncliffe Village and were obtained from the MLS® database of sold condominium units between 2000 and 2013. The specific indicators include selling prices, days on the market and the ratio between selling price and asking price. The analysis of these performance indicators is undertaken at both the neighbourhood and project specific levels as described in more detail below.
The following chart compares the trends in annual average resale price indices condominium units sold between 2000 and 2013 in Centretown with those sold in Lower Town / Sandy Hill (east of the Rideau Canal). The indices measure the changes in the average selling prices during the selected time period relative to the start point of 2000, which is the reference year set equal to 100.
Average Resale Price Index for Condominium Units Sold (2000=100):2000-2013
If one was to accept the premise that proximity to social housing projects will have a suppressing effect on the market performance of private housing or, in this case, condominium units, then one would expect that the condominium units would perform better in Lower Town / Sandy Hill than Centretown given the previous observation that the mixing of the two types of housing is greater in the latter neighbourhood. Indeed, the above graph shows the opposite trend – condominium units in Centretown have performed better compared to units located east of the Rideau Canal.
The next graph shows that condominium units in Centretown also outperformed units in Lower Town / Sandy Hill in terms of the number of bedrooms although the discrepancy was much greater in the case of 2-bedroom units.
Average Resale Price Index for Condominium Units Sold (2000=100) Between 2000 and 2013: One- and Two Bedroom Units
The following table compares the other market performance indicators: days on the market (how long it took to sell the condominium unit), cumulative days on the market (includes condominiums that were taken off the market and then relisted) and, the ratio between selling price and listing or asking price expressed in percentages for condominiums sold between 2000 and 2013. The 14-year time span is grouped into 3 periods: 2000-2005, 2006-2012 and 2013. Total yearly condominium sales increased significantly between 2006 and 2012 compared to the previous 6-year period. Sales remained relatively strong in 2013 but it was also a year when average prices dropped in both Centretown and east of the Rideau Canal. Total sales in Lower Town and Sandy Hill also dropped sharply in 2013 compared to 2012.
In general, the above table displays no significant differences in the real estate market performance of condominiums sold in Centretown compared to Lower Town / Sandy Hill which supports the previous finding that the condominium market in Centretown does not appear to have been negatively impacted by the closer proximity to social housing projects in the community.
For the remainder of this blog, I will focus on examining the market performance of specific condominium projects located in close proximity to larger clusters of social housing units. The criteria I used to identify the candidate condominium projects are somewhat arbitrary. I looked at the distribution of social housing and units around each condominium project and identified those projects where there was a “measurable” amount of social housing in proximity to each project. The geographic definition of proximity was measured as the number of social housing projects/units located within 250 metres (approximately 3 minute walk) of the address of a condominium as determined by using the Google Maps walking distance between two points calculation. The candidate list was further shortened by placing a minimum number of 200 social housing units within the 250 metres walking distance.
The above steps resulted in the identification of 6 condominium projects that were located in close proximity, as defined above, to social housing projects. The real estate market performance indicators described below were then compared to the total condominium market performance for the 3 downtown communities. The list of 6 condominium projects is summarized in the following table. The two projects, The Metropolitan Phases I and II built by Domicile in 2001 and 2002 are included together. The two towers comprising the Hudson Park condominium complex at 235 and 245 Kent Street are also combined.
The resultant candidate projects list is shown below. I further simplified the list by combining 470 and 475 Laurier since both projects were in close proximity and built in the same year and were in proximity to the same social housing projects. I did the same for 364 and 374 Cooper, which are shown together in the following list. Only one project is located outside of Centretown on 180 York in the Byward Market.
Candidate Condominium Projects In Close Proximity to Concentrations of Social Housing Projects (200 or more units within 250 metres walking distance): Ottawa Downtown Neighbourhoods
The following table summarizes the market performance indicators for the final 5 candidate condominium projects. Since the individual projects were built in different years, I had to customize the performance indicators and benchmarks to correspond to the different time periods during which units were sold for each project.
Comparison of Market Performance Indicators for Selected Candidate Condominium Projects
Once again, the results of the comparative analysis from the above table show perhaps even more clearly that proximity to social housing projects have not negatively impacted on the market performance of individual projects located in close proximity. Moreover, with the exception of 180 York in the Byward Market, all the remaining 4 condominium projects located in Centretown performed noticeably better than the rest of the downtown neighbourhoods.