Key questions for Ottawa real estate 2019

Will mortgage rates continue to rise?
Rates have been creeping up but it is hard to say what we may see in 2019.  Another .25% probably wouldn’t hurt the real estate market too much but anything beyond that will certainly have an impact, when one also considers the mortgage stress test provisions.

 

Will listing inventory stabilize/improve?
We have seen very low listing inventory conditions throughout 2018, making life difficult for buyers and their agents.  Will this continue in 2019?  The number of new listings has flattening out somewhat in latter 2018 so we are not falling further behind on listing inventory but this will continue to be a critical factor.

Builders have had very strong sales in both 2017 and 2018, so it is possible there may be a backlog of resale properties to hit the market, once these new home (or condo) buyers are getting closer to taking possession of their new properties.

At what pace will prices grow in 2019?
If there was an anomaly in our market in 2018 it is the fact that resale prices did not increase as much as they might have, given the low listing inventory and supply/demand imbalance in favour of sellers.  The average residential selling price was up 5.1% to $446,415 through the end of November and the average condo sold for $278,330, up 2.8% vs last year.  Nice improvement but not the runaway sellers’ market some of the headlines would suggest has been occurring.  It is possible that the balance of sale % shifted towards lower price condos and townhomes which could have the effect of buffering overall % selling price increases.

What government action could impact our market this year?
Potentially long list here, with a Federal Government election pending, a new Provincial government in Toronto and a new city council in Ottawa.

Ottawa employment and general economic activity should be pretty stable with the current government or a minority government post-election but all bets are off, if a fiscally conservative government gets elected on a promise to balance the Federal books.  This would result in Ottawa government and private sector job losses and would chill the housing market.

Our biggest concern is what the Provincial government may do in terms of downloading, should Premier Ford decide it necessary to try and get the disastrous Provincial books in order.  Delays or cancellations to funding big projects like LRT2 or other infrastructure projects (Civic Hospital, Library) all could take a bite from the local economy.

Is MLTT coming this year?  We are fully expecting that at some time in the next couple of years, the City will join Toronto in the implementation of the Municipal Land Transfer Tax (MLTT), as this would add up to $150 million annually to the city tax revenues, without impacting most taxpayers.  Since only 5 or 6% of homeowners buy or sell each year, it is almost the perfect tax, since those not concerned with buying or selling are less likely to get hot and bothered over this type of tax.  The impact of an MLTT would be pretty significant for a buyer:  on an average residential property this would mean an additional Land Transfer tax (on top of the existing Provincial amount) which would total $10,950 for the buyer of the average $450,000 property and $18,950 for the buyer of a $650,000.

This tax has been in place in Toronto for almost a decade now, without destroying the Toronto real estate market and generating something like $800M a year in tax revenue, so don’t be surprised if this is coming our way!  When you think about it, the revenue from such a tax would almost be enough to be able to offer free transit or at the very least, half price transit which would help boost declining ridership.

Will LRT be a success?
The long awaited LRT will be pretty exciting but also nerve wracking in 2019. How well the system launches and is accepted by commuters will have an impact on the “transit oriented development” meme and developer plans/timing to populate high density condos and rentals along the transit route.  If we don’t see ridership meet projections then many things could change or be delayed.

What now for Lebreton?
The recent gyrations at Lebreton Flats and the poor sales to date at Zibi, may simply be indicative of the market overall appetite for high end urban condos but there is no question that the recent “failure to launch” will slow sales of any project in that immediate area.  After all:  who wants to plunk down a pile of dough for a condo that may get built in 3 or 4 years, next to you-don’t-know-what?  We think most consumers (and their realtors) will be hesitant to jump headlong in to pre-construction purchases, given the Lebreton saga and current status.  Unfortunately, we can’t expect the Feds to be too engaged on this file going in to an election, especially with a new Chairman at the helm of the NCC.

Bottom line:
Short of any major worldwide economic event, we see another pretty good year ahead for Ottawa real estate, despite the “cooling” reports you may be seeing throughout the national media.  Real estate is very local and all indicators look pretty good as we open the doors for 2019.  Our view is that those considering plans will want to move on those sooner rather than later, as prices continue to rise.  It is never too early to start both buying and selling plans and getting your Realtor team together, is always a good start!

Best wishes for a happy and prosperous 2019!

Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692  oasisrealty@rogers.com
www.oasisrealtyottawa.com

Clublink plan to develop Kanata GC site a reminder for buyers and homeowners

Could there be more towers at Kanata GC?

Two of Ottawa’s long time builders (Minto and Richcraft)  are teaming up with Clublink, the owners of the Kanata Golf and Country Club (and about 50 other courses) to develop the site for residential purposes.  The course sits on prime real estate in Kanata Lakes and with the golf business sagging somewhat in recent years, Clublink is continuing down the road of trying to cash in their real estate investments.  Here is a link to the Ottawa Citizen article on this news: https://ottawacitizen.com/news/local-news/clublink-wants-to-bulldoze-kanata-golf-and-country-club-and-redevelop-with-two-home-builders

Déjà vu all over again?
Those thinking this is “déjà vu all over again” are correct, as we recently had news of a similar proposal for the Stonebridge GC in South Barrhaven that is owned by Mattamy Homes.  Mattamy has apparently backed off for the time being, after significant community backlash.  Clublink has also already been working on plans to develop the famous Glen Abbey golf course in Oakville, for several years-so they have been down this path before.

“Highest and Best Use”
The key principle of real estate value in appraisal is called “highest and best use” which basically means “what use would maximize the value of this piece of property?  In the case of many golf courses, the land value for development purposes clearly outweighs the value as a golf course.

Community backlash, for sure…. but will it be enough?
There will most assuredly be a vigorous community campaign to stop this proposed development and one hopes it succeeds but don’t count on it.  The builders and developer have done their homework and at the end of the day, have more resources, should they choose to get this done.

Stark reminder for all homeowners and buyers (and their agents!):
This is a compelling example of what may happen in any neighbourhood and buyers and homeowners have to keep this in mind.  The only constant is change and just because something is so today, does not mean it will always be.  We constantly see examples of listings where there are “no rear neighbours” (at least today)  and we always do our best to research what could conceivably get built on any nearby vacant land or if in fact, something is already proposed.

What could get built here some day?
Today’s farmers field or vacant lot, could be tomorrow’s gas station, mall, office building or condo tower, so buyers and their agents will want to do their homework and also weigh this intangible in their analysis of property suitability.

Even a couple of blocks away, property that is zoned or could easily be rezoned could mean a tall condo building soaring over your back yard someday.  Not easy to predict but worth thinking about nonetheless.

 

Gord McCormick, Broker of Record

Oasis Realty Brokerage 613-435-4692

Findlay Creek bungalow and a heck of a listing deal!

New construction bungalow in Ottawa Findlay Creek MLS 1126904 $669,527

Builders have been racking up sales records for the last 2 years or more and possession lead times are growing for buyers.  One great option for buyers is to consider builder “quick occupancy” homes, spec homes, model homes or other inventory homes and your Realtor can help you shop for these.

We have a fabulous bungalow listing in Findlay Creek (MLS 1126904 at 602 Rockrose Way $669,527) that offers the best of all worlds: a relatively short delivery window (26 weeks) for a brand new construction home.  This home is built to the drywall stage and the exterior is complete, including sod, driveway paving and partial fence.  Designer upgrades have been ordered as of Jan 18th, 2019 and include over $68,000 in upgrades and extra features (ie AC) These should be installed an the property available for possession late summer.  This would allow a buyer to sell an existing property in the peak spring market.

For additional listing details and photos, please check out the MLS® listing here: https://oreb.mlxmatrix.com/matrix/shared/JwDGzRm50m/602ROCKROSEWAY

Another bonus of this buying approach, is that construction is essentially completed on this street, so buyers are getting to move in to a finished block without the inherent annoyances of ongoing construction.

In a seller’s market with limited inventory and upwards price pressures, those buying new construction can tend to benefit from both their existing property and their new construction property appreciating in value, as they wait for the new home to be built.

Best listing deal in town if you buy this home with us!
Buy this home directly with our firm and we will sell your existing property for only 2.5% +hst total commission!  (not intended to solicit those with existing representation agreements, some conditions apply)  This saves the average seller in Ottawa over $12,500 in commission and HST, compared to a typical 5% MLS® listing fee program.

If this particular home is not the right one for you, then we are happy to help find that dream home in 2019 and also optimize your equity proceeds from the sale of your existing property.

Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage  613-435-4692
oasisrealty@rogers.com  oasisrealtyottawa.com

 

Is a “shallow” well a concern when buying a country property?

would you know what this is ?

 

We had a very interesting experience when showing a country property recently and thought it a worthwhile note for those considering the purchase of a country property which is served by a private well and septic system.

We noticed the item shown in the photo and originally assumed it was the lid and riser for the septic system and in fact, the green lid is identical to those that can be found on a septic “riser”.  However, as we continued our tour of the property exterior, we noticed the septic tank area was behind the house.

With able assistance from Moe Rayyes of Canadian Water Inspection Services https://www.waterinspection.com/services  and with confirmation from the seller, we confirmed that the equipment in the photo was in fact, the cap for the “shallow” well system which serviced the property.

So what is a “shallow” well and how does it potentially affect a buyer?

A “drilled” well is by far, most common:

The listing for the property indicated that the property had a “drilled” well which is the most common type of well used to service country properties.  These are drilled to a depth and location that provides the best possible quality and quantity of water available to that particular property.

Shallow, dug and sand point wells: Pros and cons

Other types of wells are also out there and many provide reasonable and cost effective sources of water in areas with springs, high water tables and where drilled wells may be costly or otherwise problematic.  One such problem might be that the underlying aquifer does not have good quality water. ie too much salt or other mineral.

The potential disadvantage of the above type of wells is that by being closer to the surface, they are potentially more subject to bacterial contamination. (often one may see a UV light system to mitigate this potential issue) They can also be prone to water limitations during drier years, especially between May and October.  Sometimes these can even run dry and require tanker trucks full of water to replenish them until ground water levels get back to normal levels.

Should a buyer avoid a home with these less common water systems?

Many country homes are well serviced by such wells but in addition to some of the potential issues noted above; these type of systems make a property somewhat unique and generally speaking, unique features and systems may not be well understood by future buyers (and Realtors) and therefore, market value and marketability may not be as good as more standard homes.  We also know of several homeowners have been forced to truck in loads of water in dry summers to keep their well supplied for household requirements.

In the case of our buyers in this instance, they chose to pass on this property-even though it seemed to have very good value at the price.  In addition to the shallow well, it also had an original septic system which was 40+ years old which represented another risk and near term financial cost to our buyers.

As always, buyers should always get both a septic inspection and a well and water inspection from qualified professionals, (in addition to a general home inspection) when purchasing a country property.

If you are considering a purchase of a country property, we would be happy to you navigate the bumps and potholes that may be encountered along the way.

For additional information to consider before shopping for a country home, check out an archive article on our previous blog here:  https://www.oasisrealtyottawa.com/blogs/gord_mccormick/archive/2014/01/31/what-we-city-slickers-need-to-know-about-country-properties.aspx

 

Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692  oasisrealty@rogers.com

Oasisrealtyottawa.com

Optimizing real estate fees for sellers

 

 

 

 

 

 

 

 

 

Why Ottawa will have the best winter sales in a decade or more

sales should help “warm” Ottawa winter

Ottawa real estate normally pretty much hibernates from late November to late February but this may not be the case this year.  Buyers and sellers will want to consider the following factors and consider whether they wish to move up their buying or selling plans accordingly:

 

Listing inventory at decade lows:
The level of available properties to purchase continues to be extremely low and the number of new listings coming on the market, shows no signs of reversing this trend. Supply/demand alone would suggest that this has to put more upward pressure on selling prices.

Residential listings are currently 17.5% lower than last year, 35.5% lower than 2016 and 48.8% lower than 2015.

Condo listings are 34.5% lower than 2017, 45.5% lower than 2016 and 55.8% lower than 2015.

Even rental listings are down quite significantly, 31.6% lower than last for MLS rental listings.

Beat the price increase!  Your next house is going up $2-3K a month!

With residential prices on the way up (+5.7% through Oct 2018) that dream house is getting more expensive day-by-day.  For example:  a $500,000 property today may well be $525,000 or even $530,000 by the end of 2019 peak selling season.  That’s an increase of $2,000 to $2,500 per month and with mortgage rates also headed north, the cost of servicing a mortgage is also increasing.  The mortgage “stress test” which is typically 2% above the mortgage rate being offered is also moving upwards as rates rise thus making approvals more challenging for some buyers.

New construction price and availability:
Builders are also facing limited availability, after two record years of sales and also are facing some labour shortages and price pressure.  All of these factors will also continue to push up the price of new construction.

Mortgage rates:
Rates are pretty well guaranteed to rise a half point in the next 6 to 12 months, with an outside chance of going up a full % point.  This adds challenge to the approval process (mortgage stress test) and monthly cost for buyers and homeowners, so buying now and locking in at a lower rate will have some advantages. *new construction buyers will have to make sure they get a guaranteed rate from their mortgage broker or bank to cover them for the longer new build timelines.

Local economy is strong:
The local economy seems pretty solid regarding employment and there appears to be no signs of the Federal Government doing any significant belt tightening in advance of next year’s election. (Though one never knows?)  So our market should continue its current moderate upward path in the immediate future.

Provincial and municipal budgets:

A “new” city council in Ottawa is in place and we also have a relatively new Provincial government in Toronto.  The Provinces’ fiscal challenges are well noted and there are also signs that the City of Ottawa has its own issues.  Here are a few things that could happen that might add cost for buyers and sellers:

  1. If Ottawa council feels really in a budget pinch, is it possible that a Municipal Land Transfer Tax (MLTT) could be implemented here? This would add $5,000-$10,000 to the typical residential purchase transaction cost here and would cause a bubble and price run up in advance of implementation.   To put this in perspective: the total land transfer tax on a $500K home would jump to almost $13,000 and $21,000 for a $700,000 home purchase.
  2. What is the Provincial government going to do to fix their huge fiscal problem? Could they raise the level of the Provincial Land Transfer Tax? Add some other “luxury” or other tax on housing?
  3. Could Ottawa raise development charges which once again adds to the cost of new construction homes and condos?
  4. What effect will “inclusionary zoning” have on costs of new construction? This principle requires builders and developers to include provision for lower cost housing in their new projects but will certainly affect the cost of new properties, as it becomes more prevalent in the near future.
  5. Do the Feds have any plans in their National Housing plan that might affect buyers, sellers or homeowners?

 

Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage

613-435-4692 oasisrealty@rogers.com

Optimizing real estate transaction costs