Residential real estate investment has been a tricky subject for the last year as we saw the market fluctuate dramatically. With prices significantly reducing in some areas and the buyer pool remaining relatively quiet, investing wasn’t top of mind for a lot of people, and even experienced investors felt there was more risk than usual.
So what does 2025 have to offer us in terms of residential real estate investment?
While still a somewhat controversial topic, there are smart investment moves to be made and we think we’ve identified one for Ottawa investors in particular…keep reading for our investment advice!
Let’s Take A Look At Ottawa Real Estate Numbers
In December 2024, the CMHC released their Fall 2024 Rental Market Report which outlined the activity that occurred throughout the year in all major rental markets in Canada. The CMHC report outlines everything from vacancy rates, rental demand, rent prices and construction activity.
For new and experienced investors, this is CRUCIAL information to help you understand what is needed in your market.
This article will focus on Ottawa, as that’s our team’s area of expertise, however if you are interested in any other major Canadian real estate markets, this report could be a good place to start.
Here’s a Breakdown of Exactly What We Saw In The Ottawa Rental Market in 2024:
The CMHC reported that Ottawa was one of two markets that actually experienced overall average rent growth in 2024, when compared to 2023. These increases were moderate for existing tenants and more significant for new tenants. Renewed leases had an average increase of 2.2% versus new tenants with an average increase of 23.8%. As you can imagine, this vast difference has kept more renters stuck in place given that price increases are so drastic for new leases, coupled with a lack of rental inventory renter’s mobility is limited.
When we talk about “purpose-built” rentals we’re talking about high-rise buildings that were built specifically for rental purposes, not as condominium units. The trend of purpose-built rentals has increased as the government has pushed for developers to invest in these units and has offered subsidies and tax rebates for developments of this kind. With developers incentivized to invest in these buildings, even with higher demand, the supply growth was so great that it continued to outpace demand.
So why did the demand for these purpose built rentals increase significantly in 2024? Well it starts with an interesting trend amongst Ottawa renters. Census data showed that a larger share of renters live in the secondary low-rise market or lower-density housing (single-family, townhomes, duplexes or mid-rise buildings) in Ottawa, compared to other large urban centres (CMHC Report). However, there was a shortage of supply of these types of rentals which drove people toward purpose-built units. Overall rental demand is up because of our housing affordability crisis, so all who couldn’t find a lower-density unit, were stuck to turn to these purpose-built units.
Why You Should Invest in Lower-Density Rental Properties in Ottawa in 2025
Let’s first discuss the demand around these properties. As outlined above, a majority of renters live (or want to live) in this type of housing in Ottawa, but why?
Here are a few reasons why lower-density rental properties are a popular rental option:
- The space and livability of these units is much more appealing to renters, especially families. These properties often offer more square footage and a more suburban living experience, which is appealing to people who need extra space for growing families or remote work.
- You’re able to live in some of the most desirable neighbourhoods in Ottawa at a fraction of the cost of owning. Again, this is a huge plus for families who are interested in being a part of a community. Some of the most desirable neighbourhoods in Ottawa like Manotick, Westboro, Alta Vista and Barrhaven have opportunities for low-density rental growth.
- Access to outdoor space is also a huge motivator for renters in this market. Where high-rise rental units provide little to no access to the outdoors, often low-rise rental units have access to enclosed, private yards and/or nearby parks.
Here’s why Ottawa is the Perfect Landscape for Lower-Density Rental Investment
Ottawa is uniquely positioned to see growth in this area over the next few years. Suburban rental growth is expected to increase as homeownership remains unattainable for many people, including young families. In key suburban areas of Ottawa, families are looking for rental properties where their kids can grow up with key amenities like good schools, parks, community centres and more.
Unlike densely populated urban areas like Toronto, Ottawa’s charming atmosphere and ever-expanding suburban market is the perfect place to plant some roots and get started with real estate investment.
Right now, the growth we’re seeing in purpose-built rental demand is circumstantial. It’s a response to a lack of inventory in the lower-density rental market. Ottawa residents want access to rental units in row homes and single-family detached homes, and we have Census data that backs us up!
Whether you’re looking for a vacant lot to build on or an existing property to convert into a rental – we think 2025 is your year! There are many options when it comes to investing in residential properties, and our experienced team of real estate professionals is here to help! Adam himself has built his own infill property with 4-rental units in Westboro and documented his experience to show the entire process from start to finish!
If you want to learn from Adam’s adventure, check out our blog on investing in Manotick where we included links to all eight parts of his video series!
If you’re looking for a new venture in 2025 and feel confident in the Ottawa rental market, reach out to us! We can help you on your search for the perfect rental property or simply answer any questions you might have!
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