The condominium market is the bright spot in an otherwise dull start to the 2005 real estate market in London, according to London and St. Thomas Real Estate Board (LSTREB) statistics.

A total of 249 condominiums were sold in the first two months of 2005, an increase of 11.2 per cent from the first two months of 2004, when 224 were sold.

The total dollar value of the units sold was $30.9 million, a 19.9-per-cent increase from 2004's $25.76 million.

Sales of detached homes declined by 2.9 per cent, with a total of 846 sold in the first two months of 2005 compared to 871 in the same period last year. The dollar value rose 4.3 per cent, however, to $158.23 million from $151.78 million in 2004.

Peter Tiahur, Business Edge
Kenmore Homes' London construction manager Lou Squazzin checks out the progress of homes in the Forest City.

Despite the slow start, the London real estate market is healthy after strong sales of 8,903 units in 2004 worth about $1.48 billion, LSTREB president Vito Campanale says.

"We had a 9.6-per-cent increase in sales (last) year," Campanale says. "There are a substantial amount of new homes being built all over the city."

January and February typically are slow months for the real estate market because of the weather.

Across Ontario, building starts are down 6.81 per cent in the first two months of 2005 with 134,200 housing starts compared to 144,000 last year, according to the Canada Mortgage and Housing Corp. (CMHC).

While London has seen only 256 building starts this year compared to 265 at the same point in 2004, Kenmore Homes had a busy 2004 and London construction manager Lou Squazzin expects 2005 to be even more productive.

"We had about 80 starts and about 61 sales or closed deals (in 2004)," Squazzin says. "We're expecting that number to go up by 25 per cent."

LSTREB statistics show two-storey houses are the most popular type of detached home so far this year in the city of 330,000. A total of 228 units has sold at an average price of $244,528.

Squazzin, who says Kenmore Homes finds its niche in the starter-home range, confirms the statistic. "I'd say our most popular style is the two-storey, three-bedroom home."

Like the rest of Canada, the London real estate market has been experiencing the benefits of low interest rates. The low rates also are affecting the type of home buyers are looking at.

"I wouldn't say they're skipping the starter home," Campanale says. "They may now be able to afford something a little more expensive than they traditionally would."

In addition to the favourable interest rates, Squazzin says London's economy also is appealing to any homebuyer.

"We see a lot of good growth here," Squazzin says. "A lot of new plants are going in and there's a diversified economy. That's one of the reasons Kenmore came to London."

Kenmore, which has its head office in St. Catharines, set up the London division 14 years ago. It also has a division in Waterloo.

London's unemployment rate dropped to 6.4 per cent in January from 6.7 per cent at the end of 2004, according to federal government statistics.

Campanale says that contributes to home buying.

"It gives consumer confidence. People are not concerned about losing their job," Campanale says. "We have a real demand for labour in this city."

Squazzin says he does not believe an increase in mortgage rates would have a serious effect on the current market.

"If the rates go up you'll see less upgrades like ceramics," Squazzin says. "The houses will still sell, but it will be back to the basics like vinyl flooring."

The increase in condo sales may suggest a trend and Squazzin says they are appealing to more than one demographic.

"You get the young professional couples that are looking at condos now. They have a busy lifestyle, so it saves them on having to cut the grass," he says. "I think condos in the past have been more geared toward retired or older-type people."

With the addition of the $51-million John Labatt Centre hockey arena and special events facility in 2002, the city's downtown area is coming to life and Janette MacDonald, manager of Mainstreet London, would like to see more people moving toward the centre of the city.

"It's always been my philosophy that to revitalize downtown you need people to live in it," MacDonald says.

Mainstreet functions as a street-level liaison between the city, the public, businesses and landlords to revitalize the downtown area.

The program was started in 1999 and is funded by the London Downtown Business Association and the City of London.

MacDonald says there is a definite demand for downtown condos.

"If a condo goes up for sale, it's being snapped up sight unseen practically," she says. "It's very, very hot.

"We have about 5,100 units in the downtown. That includes apartments and condos," adds MacDonald. "We could use four or five times that amount."

MacDonald says downtown revitalization is a high priority for the city, which hopes to expand the number of residential units, as well as attract large businesses to the heart of the city.

"We're hoping to bring in some bigger, national retailers," MacDonald says.

"We're fortunate we live in such a great city," says Campanale. "We have a diversified economy, we have good governors in our city, so things are looking good.

"The market is good, interest rates are low, employment is up and there's demand for skilled labour. All the indicators are quite positive so we're looking forward to the future."

(Dave Richie can be reached at richie@businessedge.ca)