Ottawa real estate has posted solid results over the last 2 years but is it really as “hot” a market as is often portrayed?
Both buyers and sellers should beware of headlines, myths, legends and Realtor marketing which can tend to obscure reality and create unrealistic expectations.
Let’s start with some facts, based on 3rd quarter 2018 results and see how this jibes (or not) with some market perceptions:
Unit sales year to date:
Residential sales are very flat this year with units sold up only* .3% in the first 9 months of the year. Condo sales meanwhile (though a much smaller #) are up strongly at 15.1%
*There is a school of thought that says the low residential unit sales increase is due to listing inventory limitations and there is some truth in this.
The average price of a residential property sold in Ottawa this year is up nicely by 5.2% to $447,427. The average condo price is up only 2.3% to $278,401.
Good solid numbers but not exactly runaway sellers’ market results, right? So why is it that if asked, many people would say we are in a “crazy” strong market and everything is selling quickly, with multiple offers and over list price sales?
Headlines and social media:
Clickbait headlines and search word worthy social media posts and videos tend to be as dramatic as possible, so quite often outlier examples ie one house in Barrhaven sold with “xx offers submitted and sold for xx,xxx over listing” tend to over influence the market reality.
Also, quite often, short term results, such as a single month sales report are taken to represent the overall trend which may or may be correct. Sales or prices for a single month (or even 2) touting a runaway market may not be consistent with longer term results (4 to 6 months or more) and therefore skew buyer and seller thinking.
Realtor marketing is pervasive and hypes their individual results, focusing on the how many they sell and how quickly and for list price or better. Again, giving the impression that everything sells in a just a few days on the market (or even before being on the market!) and creating an impression that this is the market norm. We submit that the overall sales stats refute the common perceptions created by these Realtor marketing posts. One high level Realtor marketer quoted earlier in the year that more than 50% of their listings were selling in multiple offers &/or over list price. While this may have been true for a short period, there is no way this is true over the year to date results. Unfortunately, such marketing claims can mislead consumers. * during that approximate period the Ottawa Board did quote a figure of 20% of properties selling at list price or above for that specific month. Unfortunately, there does not appear to be an easy way to track this statistic, which is totally bizarre in 2018.
Listing inventory continues to be low:
Listing inventory continues to run much lower than over the last 5 years (currently residential inventory is 16.8% lower than a year ago and condo inventory is 28.2% lower) These numbers certainly reflect a relatively thin level of supply but if it was truly drastic…wouldn’t the average selling price increases be much higher under typical supply and demand rules?
Builders recording huge sales increases over last 2 years: Part of the growth in the recent market has been a huge uplift in builder and developer sales of new construction housing and condos and only a small portion of these are sold via MLS listings, so this growth is not included in our market statistics. Most of these new construction buyers also have a property to sell and these properties do eventually get to the public market via an MLS listing, so those pending listings arrive in the resale market 90 to 150 days before the new construction property is due for possession.
Grey market for listings:
There has been a long growing trend towards pre-announcement of listings by Realtors both as a marketing tool and an attempt to get a property sold sooner. Everyone has seen the “Coming Soon” or “Exclusive Listing” sign toppers in their neighbourhood and these are examples of what we call the “grey market”. Though an advance notice market may seem like a good idea, we think it takes away from the impetus and proper MLS launch of a listing but if it makes sense to that seller, then of course that is up to them.
Unfortunately, any sales recorded by these “grey market” listings are not captured by MLS and therefore not included in our Ottawa Board statistics, which may distort the overall sales picture. (in fact, it may understate results and average prices)
Overall, our market is healthy and lower listing inventory still favours sellers-so this fall and winter should be among the best in many, many years. One of the tenets of Ottawa real estate is that it is steady and stable without the large peaks and valleys, experienced in some other markets and we are better off for it.
We are in a relatively strong market but not a runaway seller’s market and we would be happy to provide detailed research for buyers and sellers appropriate to their individual situation.
Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692 or mobile 613-371-9691
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