Condos are edging out apartment buildings when it comes to construction in Ottawa, according to the Canada Mortgage and Housing Corporation.
“On average, we’ve seen a lot more condos being built than rentals,” said CMHC senior market analyst Sandra Perez. “Builders are responding to housing demand.”
Housing starts from January to September 2011 show a steep decline in apartment rental units: 83 were constructed, versus 917 condo units.
Compare that to 2010, when 323 rentals and 1,536 condos were built.
“The supply is shrinking,” said Perez.
The Canada-wide condo boom is in full effect in the nation’s capital.
“The market’s very strong in condo sales,” said Marnie Bennett of Keller Williams VIP Realty.
She said her team has sold 300 condos this year, matching last year’s figures.
While the popularity of condos generally means decreasing demand for rentals, many homeowners are buying condos to rent them out, directly competing with conventional apartments.
Last year, roughly 20% of all condos purchased in Ottawa were for rental income, said Perez.
In 2010, the rental vacancy rate in Ottawa for condos was 2% versus 1.6% in apartments.
“The market is tight,” said Perez, adding with high income and low unemployment, Ottawa is a major magnet for migration.
“Everyone wants to be here,” said Perez.
“The condo market is alleviating this pressure.”
Referencing figures from Statistics Canada, Perez said 12,000 immigrants settled in Ottawa last year alone, keeping the demand for rentals high.
“Immigrants rent for six to eight years before they buy,” said Bennett.
And not only is the condominium craze in full swing, it’s no longer concentrated in the downtown core.
Five years ago, “89% of all the condos were in downtown Ottawa,” said Bennett.
“Now that’s been reduced to 60%.”
Trendy areas such as Westboro, Little Italy and New Edinburgh are seeing rapid development.
So why are condos so popular?
It’s all about the bottom line, says Bennett, who says the average house in Ottawa costs $362,000 while a condo runs for $270,000.
“It’s the most affordable housing style,” she said.
Kanata-based Royal LePage agent David Haynes, says more and more buyers are drawn in by condos and they’re willingly forking over condo fees, even if it’s not for a unit with a penthouse view .
“With the new construction going on and the views are limited, people are still buying because they don’t care about the views as much as they used to. They just want to be downtown,” said Haynes.