Demographics
Dictionary.com defines demographics as "The characteristics of human
populations and population segments, especially when used to identify consumer
markets." Since real estate is a consumer market and people will always be
buying property, demographics has a direct effect on property demand, styles,
values, etc. Therefore, it's important to study demographics to determine any
positive or negative effects on the type of property an investor is buying.
The baby boomers, defined as the more than 76 million people born between 1946
and 1964, are a good example of a segment of the population that has had
tremendous effects on the North American marketplace. Everything from baby
products to health care to real estate has been touched by this influential
market segment.
While the baby boomers will likely have a huge effect on real estate values all
across Canada, we must always use demographics in the context of our local
investing marketplace. For example, if we were investing in a city near several
major growing universities with students dominating the real estate marketplace,
it may be wiser to cater to students instead of baby boomers.
When entering a new city or area of town, take the time to understanding what market segment (ie. age group, employment group, education group, etc.) you will mostly likely attract given the location and type of investment property. Once you know your "target customer", you will be able to determine the best method to market your property. In turn, this research will provide you with:
- Faster time to rent or sell the property. For example, if we are renting or selling to baby boomers, we can highlight amenities such as ease of transportation, proximity to quality health care, retail services and recreational activities.
- Lower vacancy rate as you are renting to the correct profile for the area
- Higher market rents or sale price due to the large demand in your area
So how does all this stuff relate to Ottawa?
Let's examine a few statistics about residents in the Ottawa area that can
help an investor decide where to invest and what types of properties to invest
in:
- Ottawa is a city of renters - 39% of all dwellings are rented. This
indicates Ottawa is a good city to invest in rental property.
- 28% of the downtown population, and as high as 58% around Ottawa
University, are people in their twenties. Downtown and near the universities
are greats area to provide student rental housing, or sell properties that
cater to student lifestyles (e.g. condos).
- The baby boomers seem to be residing either right downtown, or in rural
locations, while existing seniors seem concentrated mostly in older, inner
suburbs. The baby boomers will most likely migrate from rural locations to
urban ones, where recreational, shopping, and medical services are
concentrated.
Ultimately, studying demographics can not only show the best areas to invest,
but also provide a crystal ball that will allow the astute investor to predict
areas poised for the best future growth.
Source of statistics: City of Ottawa website, Planning &
Building, Ottawa Facts & Research,
Ottawa Counts
This article is copyright © 2004-2010 Spirepoint Properties. All rights reserved.
Paul Blacquiere and Joanne Beehler are full time real estate investors and have been investing in Ottawa, Ontario, Canada since 2002. They are owners of Spirepoint Properties, a Canadian real estate investing company dedicated to making real estate investing easy.
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