Let’s dispel a major Ottawa real estate myth: that summer is “dead” in real estate
It has long been held that summer is dead in real estate and things pick up in the fall…but is it really true?
….not so much, as our research has proven! (See monthly unit sales chart)
We hear this all the time from sellers, home owners and even other Realtors who seem to think that there are two “prime” or “peak” seasons in Ottawa real estate: spring and fall. We hear statements like “everyone is on vacation” or “gone to the cottage” etc. thus explaining why real estate “dies” off in the summer and somehow is magically reborn and “things pick up after Labour Day”.
While it is true that summer sales do dip compared to the super peak season in May and June, July and August are the next best sales months the market will see until the following April, so serious buyers and sellers should not put their real estate plans “on hold” until the fall’s purported “2nd season” in the Fall.
Summer unit sales: July and August 4th and 5th strongest months
Sales in July and August are some 20-25% less than those in April-May and June but are still usually well ahead of sales in September and October which are a further 10-20% lower, followed by November when sales start to go in to the winter hibernation phase of Ottawa real estate.
New Listings and total listing inventory are also typically higher in the summer months than in the fall and winter, so it is a great time to be buying also.
How did this myth get started? …hard to say but possibilities include:
After a busy spring season, some Realtors may be looking for a bit of a break themselves, which is hard to do when one has to be “on call” and readily available close by to support a new listing or buyer client. So if a buyer or seller plans can be deferred a couple of weeks, the Realtor can sneak in some summer vacation time for themselves.
Also, some Realtors may feel that for whatever reason, a certain property may get more attention in the fall or they may simply be trying to save some business activity to anchor the balance of their business year, especially with the typically slow winter season approaching from mid-November on.
There may be some valid reasons in terms of market circumstances, competitive listing inventory, seller vacations, property preparation for listing and so forth but let us be perfectly clear: don’t delay listing your property in July or August because you think business is stronger later!
Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692 or 613-371-9691 firstname.lastname@example.org
Ottawa real estate had record unit sales in May and the combination of all indicators suggests we are either in a seller’s market or very much on the verge of one.
Sales and prices were up and new listings and overall listing inventory were down thus making for a good month for sellers and listing agents but not so much fun for buyers.
May is typically our busiest sales month (followed by June and then April) as our market is boosted by families looking to move before school starts in September and also a strong transition of government staff (primarily military and RCMP) moving to and from our area.
Unit sales strong:
Residential unit sales up 12.4% for the month, condos up 44.6%
The number of residential units sold in May was 1856 vs 1612 a year ago.
Condo unit sales were 444 vs 307 in May 2016
On a year to date basis through May, residential sales are up 12.4% and condo sales up 27.1%.
Average prices increasing nicely: The average price of a residential property sold in May was $436,625 and increase of 7.4%.
The average condo sold for $270,993 in May an increase of 2.3%.
Year to date increases for residential properties sold is trending up 6.7% and for condos 4.9%. This is our best average price growth in 5 or 6 years.
Listing inventory continues to be the key indicator to watch! New listings continued to slow with condo listings lower than May 2016 by 6.3% and the # of new condo listings down by 13.2%.
Overall, the number of new listings is 10% lower this year to date.
End May listing inventory signals more demand in coming months!
The combination of strong unit sales increases and a lower number of new listings leaves us at the end of May with 25.3% fewer available listings in the residential market and 22% fewer condos that in 2016.
This means more competition for available listings in general and thus favours sellers. On an area by area basis this may vary but it does jibe with what we are seeing daily in the market.
New listings to sales ratio indicate seller’s market conditions during May:
The number of residential sales (1,856) to new listings (2607) yields a ratio of 70.2% and this is almost Toronto high! (a ratio above 60% is said to reflect seller’s market conditions, with 40-60% representing a balanced market and less than 40% a buyer’s market.) On a year to date basis the ratio is 58.8%, just short of a seller’s market
Condo unit sales for May (444) vs new listings (734) yield a ratio of 60.4%, also just in to seller’s market territory. On a year to date basis the condo ratio is 46.8% which suggests a more balanced market.
What can we expect in the long, hot summer?
We are certainly seeing more multiple offers and offers days being established by sellers and their listing agents, especially in key geographic areas and price points. Sellers should discuss their pricing and marketing strategy with their listing salesperson to determine the best course of action for their circumstances.
Buyers want to be on top of new listings (and price changes) and not wait for an Open House to go and see a property that may interest them.
Both sellers and buyers will also want to determine their own position on how they wish to participate in a multiple offer situation, should one materialize.
Why pay 5% commission to sell in a “hot” market?
Buyers and sellers need their salesperson or brokers’ advice just as much in a hot market as in a slower one….but do you really need to pay 5% commission on the selling side?
If you don’t think so, give us a call and we can explain our options that will *save you 26% to 50% of the selling fees on your sale. 613-435-4692
*not intended to solicit those with existing listings. Savings based on our range of listing commissions vs typical 5%.
Gord McCormick, Broker of Record Dawn Davey, Broker Oasis Realty Brokerage 613-435-4692 email@example.com Oasisrealtyottawa.com
An experienced, effective and inexpensive residential brokerage
It wasn’t too long ago that buyers had the upper hand in Ottawa, as we were saddled with excess listing inventory, flat sales and very low average price increases. It is looking like 2017 may be a whole new ball game though and we may be in the first stages of another seller’s market, which we have not had for at least 5 or 6 years.
2016 was a transition year: Between 2013-15 we experienced a period of excess listing inventory which combined with flat sales and price increases, created a market favouring buyers in general. (Although some high demand urban neighbourhoods may not have experienced this quite as much)
Starting about a year ago, we have seen unit sales improve consistently and though prices have remained fairly flat until recently, the number of new listings and overall listing inventory has decreased steadily…a good sign!
Overall listing inventory right now: (early March 2017)
Our current available listing inventory is well below (20%) some peak levels experienced in 2015 and new listings continue to lag behind by approximately 10%. Unit sales improved in 2016 and currently seem to be improving further. As these trends continue, we end up with a supply/demand shift favouring sellers and more competition among buyers for fewer available listings.
“Chronic”, overpriced, stale or unique listings:
There is always a certain percentage of listings that fall in to this category and these lower demand listings are bypassed quickly by most buyers. Though these listings are shown in overall “available” listings totals, they are not in high demand, regardless of the improved overall environment.
One buyer example:
In doing a search for a current buyer, we found the following out of 31 listings that met their general specifications:
Chronic listings on the market for extended period: 9 listings or 29% (anything beyond 90 days we consider chronic which means either the property has a problem and/or is overpriced.)
Busy street or other location issue: 7 (this young family does not want a primary or secondary collector street)
Unique listing or one with an obvious issue: 5 (not looking for a fixer upper or one with has obvious resale challenges in future)
Total: 21/31 listings or 67.7% of available listings are not viable for this particular buyer couple, leaving only 10 properties to consider. So while there might seem to be a fair number of listings, there really is not for these customers.
As it turns out our buyers have submitted an offer on one of these properties but it looks like it will be their 2nd go round in a multiple offer situation, in as many weeks.
New listings sell fast:
The sell through of new listings at this time of year is 50% or more of new listings selling in less than 30 days, so buyers don’t have a lot of research and decision making time. Being prepared and having a well prioritized search can really help ensure one is ready to jump on new listings, as soon as they happen.
There is not a major shortage of overall listings (a la Toronto) but the demand for quality listings is improving and in many cases, greater relative to supply, so buyers and their representatives need to be on top of their game or someone else will beat them to the hot new listings hitting the market.
Having a Realtor buyer representative fully engaged in one’s search is even more critical at this busiest time of the year.
Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
Our Ottawa market is showing some strong signals that we may be seeing a return of seller’s market conditions, with stronger demand, rising prices and the increase in the number of multiple offer situations. This can be a stressful experience for all parties, particularly buyers who have not experienced the process.
We recently competed in a multiple offer (representing a buyer) on a detached single home in the south end which attracted 5 offers within 48 hours of being listed on MLS®. We were not successful with our offer and our buyers were very disappointed but we gave it our best shot in the fast paced process surrounding these types of situations.
Here are some of the key challenges in the process:
Compressed timelines: The listing was just posted on MLS® later on Monday. We alerted our buyers to the new listing that evening and requested a showing directly via the listing agent that night. We actually viewed the property twice on Tuesday, once with one of our buyers and the 2nd time with both buyers. (one of our buyers was actually able to take the day off work to get in to see property as early as possible)
We submitted an offer on Tuesday evening that was slightly over asking price, as we expected that demand would be reasonably strong given the amount of showing activity on the listing. We were aware of the fact that another offer was pending and it had been submitted just prior to our own offer.
Our buyers revised their offer price upwards, based on the 2nd offer.
The listing salesperson had now established an offer presentation time for Wednesday later afternoon. By early-mid afternoon Wednesday, we were aware that there were now a total of 4 offers registered on the property. (there ultimately ended up being 5 offers submitted)
Our buyers revised their offer price upwards a 2nd time to their absolute maximum and we submitted revised documentation to the listing sales person.
Buyer roller coaster: Buyers are caught on a roller coaster of emotions: from the elation of seeing a property they both really want in their price range and area, to happily submitting an offer which is over the listing price and hoping there are not too many offers, to frustration from waiting around without any control of the situation, to stressing about how much one should offer and avoiding temptation to overpay or remove some important condition from the offer which may help “win” the property bid but prove costly later, to the anticipation of waiting and hoping your offer will make it to the top of the pile, to the disappointment that comes from finding out that it was a good offer but not quite good enough.
Sellers are happier but not stress free: Sellers are definitely the beneficiaries of the best possible market value in these scenarios but they are certainly not stress free. This young family was pretty much shut out of their home for the better part of 2 days while buyers and their agents toured the property.
These sellers also have a home they are buying, so until their own property sells and firms up, they are not 100% sure of securing their own dream home. Even if it looks pretty good right now, it is still not over until the final paperwork is done with any buyer conditions satisfied.
Buyer representatives have a lot of conflicting pressures: All buyer representatives want the right property for their buyers and at the right price. While one-on-one negotiations with a listing agent and seller have one set of challenges and variables, multiple offer situations are completely different and the buyer representative has far less control or influence over the outcome.
Price, closing date and conditions are the critical factors and we want our buyers to win but not pay too much or sacrifice important conditions. i.e. like foregoing a home inspection or not including a financing condition.
Add to this the uncertainty of knowing what the “winning” price might be and how to properly advise buyers is a challenging task.
No “cake-walk” for the listing salesperson, either: The listing sales person has their own set of pressures in professionally representing the seller, co-ordinating access for showings, communicating on a timely basis with all interested parties and running a well-organized and credible multi offer submission, advising sellers on bid selection, negotiations and debriefing all who have submitted offers. This is a pressure packed process for them as well. In this case, we had a very professional listing salesperson who very ably managed all of these from our vantage point.
Everyone’s life is “on hold”: All parties to these situations are pretty much “on call” as the dynamics of these situations unfold and the process lurches towards a conclusion. Don’t miss out on a phone call, text or email-as you may lose out on timely information or ability to act upon that information. When the ultimate prize is so important, everything is circumspect and under a microscope. Did we do everything we could? Was there more information we should have had? Should we have been more aggressive? How much risk should we take?
This is definitely starting to look like a “you snooze…you lose” kind of market: What about the buyer representative who missed the listing or the buyer who wasn’t quick enough to even get in to see it? What about the buyer representative who wasn’t available to get their buyers in to see the property? What about the buyer who said: “let’s wait for an Open House”?
Bottom Line: It is always disappointing to “lose” but our buyers did everything they possibly could and are moving on to the next one. Our job is to find them an even better one than the one that got away and it’ll happen for them!
The New Year brings optimism and while we expect another pretty good year in Ottawa real estate there are still a lot of questions and issues that will shape our marketplace and affect buying and selling plans. Here are a few we think worth watching:
Listing inventory levels:
We had a positive turnaround in 2016 with fewer new listings and total listing levels, after a couple of years of historical records and bloated excess listing inventory . This helped get the market back to a “balanced” market territory in 2016 but just barely. Positive unit sales growth would continue this improvement but a small slip could put us back in buyer’s market territory.
Mortgage rates and qualifying rules:
While there is no reason to suspect significant change in mortgage rates, the mortgage rules and new qualifications may delay first time buyers entering the market. The 4.64% mortgage qualifying rate (vs market rates approx. 2% lower) makes the approval threshold higher for buyers and if this source of new market entrants slows, then “move up” sellers have fewer prospects for their property. Further government moves may also impact the market.
How long does it take the average house to sell?
This is another key indicator on the health of the overall market and it has been going the wrong way for several years now. 2016 (November) year to date the average home has taken 55 days to sell and the average condo 70 days. These compare to 34 days and 27 days, as recently as 2010.
Chronic listings have taken even longer to sell and our newer indicator for CDOM (cumulative-days-on-market) currently stands at 85 days for residential and 112 days for the average condo sale.
New home construction activity and performance:
New home sales were up 15-20% during 2016 after an “off” year in 2015…will this continue? Will this cause a backlog of new home buyers with existing homes to resell thus inflating competition in the resale market?
Many of the marquis new developments are inside the Greenbelt in places like Ottawa East (Greystone), Zibi/Lebreton and Wateridge (former Rockcliffe base). Will these higher end developments draw buyers in sufficient numbers and will that impact suburban sales?
How will the condo market perform in 2017? We have no shortage of projects…are there enough buyers?
With a lot of purpose built rentals coming in the future, (i.e. Lincoln Fields/Westgate/Elmvale), will these challenge investor buyers and owners with increased competition in the rental market?
How will governments impact our market this year?
We are a government town and it is no surprise that our market perked up with the 2016 fiscal year starting in April last year. After several years in the doldrums and tight Federal spending, we had increased spending and headcount and a positive environment with the new government which contributed to improved results.
The provincial and municipal governments have been pretty supportive too; abandoning some measures (increased land transfer taxes, higher development fees) and lots of cash for major infrastructure (LRT, sewer upgrades) and general maintenance.
The Province has upped the land transfer tax rebate limit for first time buyers to $4,000 from $2,000, so that is a plus for 2017.
Will the Feds take further action nationally to attempt to “cool” the super charged Toronto/Southwestern Ontario market? Will the federal National Housing Strategy complicate the nature of local real estate?
Will the Province bring in the long awaited Home Energy Rating and Disclosure Program this year? This program will force home energy audits prior to listing a home for sale and the “energy score” will be published on MLS® listings. This may hurt older generations of homes/homeowners and result in market challenges for these sellers.
Will ongoing increases in utility costs negatively impact some homes/properties more than others?
Higher utility costs are felt most by the 45,000 Ottawa area homes serviced by Hydro One, so will further increases impact sales for these homeowners?
Will the Province and/or the Feds follow BC’s lead and create a matching interest free loan to help first time buyers?
Will our market roar ahead to catch up with much higher price valuations in the rest of southern Ontario? Ottawa has not been participating in the house price increases of other major centres in Ontario over the last 4 or 5 years. Could this be the year we play “catch up”?
We don’t see a lot of new significant or contentious action from either Provincial or Federal governments, as both await the outcome of the Cap and Trade/Carbon Tax program and the host of new mortgage rules. Federal funds should continue to flow and we can see some slightly better average price increases but still probably only inflation level or slightly better.
If you do not have a Realtor helping with your buying/selling plans, now is a great time to sit down and plan, as peak season starts in only a few weeks! If you do not have a Realtor, feel free to give us a call! 613-435-4692 or follow us on social media to keep an eye on Ottawa real estate…it should be an exciting year!
The Province of British Columbia has recently introduced a program that will provide no interest no payment loans to help first time buyers get in the market. On first glance, this seems to be an attractive program and one that helps these buyers and the real estate market as a whole…but does it really help?
How it works:
The government is promising to match down payment funds with a loan up to $18,750 with no interest or payments for 5 years. Presumably, in year 6 the buyer would start repaying this loan or 2nd mortgage in a manner similar to the Federal homebuyers plan (HBP) where a buyer repays the amount used for down payment back in to their RRSP over a maximum period of 15 years.
This certainly helps gets buyers in to homes and helps them gain that first step on the property ladder.
Does it really help the buyer or just create further debt? Some say that these programs are useful to a degree but like any loan…eventually, it must be paid back and further indebts the borrower…so does it really help the first time buyer? In in growth market, these types of loans are usually absorbed in higher ongoing house prices and corresponding equity growth but what if market prices plateau or drop?
Does it help the market balance or simply keep the upwards pricing trajectory?
The BC market has been hit with many sources of turbulence this year and affordability is a major concern. The government clearly feels that programs like these are needed to both help buyers get in to the market and keep a source of new home owners entering the market which helps the whole market grow (or at least maintain itself). Other monetary moves have restricted new foreign buyers and affordability and new mortgage rules have pinched the supply of new buyers entering the market which combined could have a negative effect on market health.
Other circumstances being considered: Organized real estate through its associations has been lobbying governments to both index the amount of the HBP and widen the application of RRSP funds to other life circumstances in addition to the first time buyer program. Examples include those relocating to take up employment and those who become disabled. (although other circumstances have been mentioned in the past ie divorce/separation, caring for a family member and so forth) While one can see how these programs could be useful to the home buyer at the time…does it not simply grow indebtedness and continue the upward price cycle of housing?
The persons using the program would have further savings capabilities curtailed while they are repaying the funds used out of the Retirement funds and losing the investment and growth value also. While it certainly helps on the housing side is it a good thing for the overall investment picture and does it put too many “eggs” in the housing “basket”?
It would not be surprising to see that there may be some appetite for a BC like program in Toronto where prices are high but we’ll have to wait and see what rolls out and how the program and BC’s real estate market fares.
Over the years we have assisted many out of town buyers looking to purchase homes or condos to provide housing for their children who are coming to Ottawa to attend one of our large and growing post-secondary colleges or universities.
With limited on campus residences and cost factors in mind, many parents have bought apartments, townhomes or homes to accommodate student needs and also as an investment or cost offset.
Many have successfully bought and then sold several years later and either made some money or minimized the cost of accommodating the student during their years here in Ottawa.
Once a “slam dunk”…. For most of the new millennium, this practice has been pretty positive, particularly for those who have rented out rooms to other students as well as their own children and those parents who have more than one child who will be living in Ottawa during the same period.
Now that we are in a period where prices have not been advancing at 5%-7+ annually, as they did during the 2000-2011 timeframe, this practice is no longer the “slam dunk” it was for many parents. We recently completed a sale for an out of town family who bought in 2010 in a strong seller’s market and were able to sell in 2015 but only appreciated a very small increase in the price of the property from what they had paid 5 years earlier. While this was disappointing, these owners had kept the property well rented out to other students during the 5 years of ownership and therefore, still came out pretty well financially, despite the limited uptick in the value of the property.
Do you want your university age child to bear the burden of ownership and property management? Some out of town parents may not wish to burden their children with the responsibilities of managing and maintaining the property; collecting rent, divvying up utility costs, being a disciplinarian and so forth, in addition to their school work and perhaps part time job. Other parents may deem this a good “learning experience” and see it is as an opportunity.
Many factors to consider: Those considering the purchase of such a property here in Ottawa should carefully research all financial factors in buying and selling in a remote city and the best source of information is a local Realtor who can assist with competitive issues, neighbourhood choice, property choice, local rules, buying and selling costs and so forth. This practice is certainly no longer a “slam dunk” in our market and should not be carefully researched with local professionals.
For more information or to discuss particular circumstances, feel free to give us a call if you are not already working with another Realtor.
Seasonal sales dip:
Ottawa real estate typically takes a pretty good dip from mid-November until at least mid-February and unit sales drop off 40 or 50% from the monthly average for the rest of the year. It may however be the best time for many to buy a new construction home from a builder.
So why buy now?
Most builder deliveries are currently being booked for summer or early Fall 2017. For those with an existing home to sell, this means one would end up selling the existing property in peak season in April, May or June to facilitate a closing in the summer time.
This is a much better situation than those with January, February or March closings-as these buyers are faced with selling an existing property in the latter part of the year when buyers are fewer and many buyers prefer not to close in the winter months.
Prep to sell time improves:
One of the advantages of buying a new home is that there is lead time to prep and existing property and make sure it is in optimal condition for listing. Given the lead time between now and spring, there is some good “runway” for homeowners to do painting, organizing or minor repairs in advance of listing the property for sale.
It also gives more planning time with one’s Realtor, mortgage broker, stager and trades or service people.
First time buyer advantages:
First time buyers can also take advantage of having some lead time to continue saving for their purchase and also take advantage of RRSP contributions for both 2016 and 2017 tax years, before withdrawing those funds to use for the house purchase. Kind of like double dipping and is perfectly OK with the tax man, as long as the funds are deposited for at least 90 days.
758 Bunchberry Way , Ottawa
*We have deals for new construction buyers (and sellers) !
First time buyers get a $1,000-$2,000 buyer bonus if they buy a new construction home with us.
Those with an existing home to sell can take advantage our super low full service MLS® listing fee of only 3.0% if they buy a new construction home with us before the end of February 2017 and quote this article. (*not intended to solicit those with existing representation agreements, some conditions apply)
We list a lot of homes for a major Ottawa builder and help them meet their sales objectives, so this knowledge and experience can benefit those shopping new construction. It is one of our specialties! So give us a call before you head to a builder sales centre and we can be your new home consultant!