The Ottawa Real Estate Board (OREB) June results report another strong month of sales and price gains. Virtually every indicator is positive and suggests continuing growth in the months to come.
Average prices and unit sales continue upward trend:
Our best average price increases in many years with the average residential selling price up 7.2% to $427,721 and the average condo up 6% to $274,974 through the first half of 2017.
Residential unit sales are up by 10.8% and condos by 26.2% on a year to date basis.
Listing inventory plummets:
The one somewhat challenging statistic is the continuing decline in new listings (-10.3% year to date) and the overall listing inventory at the end of June which shows the number of residential listings down 27% from a year ago and condos down 22.2%. (compared to historical highs at the end of June 2015, residential listings are down 36.4% and condos down 28.1%) This is a good situation for those selling but not so much for buyers.
These inventory levels suggest continuing strong demand for the foreseeable future.
New home sales up 44%
The Ottawa Home Builders Association reported that housing starts are up 44% this year to date, compared to last-so builders are seeing very strong activity also. Accordingly, builder prices have bumped up this year and buyer incentives have generally decreased from a year or two ago.
More sales falling through:
Conditional sales that do not firm up normally run about 5 or 6% but we notice that this is up to more like 8 or 10% this year. This may be caused by buyers who make an offer quickly and then have some buyer remorse. Another possibility may be that sellers are less inclined to adjust prices after home inspections discover some latent issues, thus causing buyers to walk on signed conditional agreements. Tighter mortgage qualifying rules may also be a factor.
These sales “fall throughs” are worrisome, as they effectively take a property off the market for 5-7 business days and then potentially leave a stigma as to why the deal did not proceed which may turn other buyers away from the property.
More offer dates and multiple offers:
We are seeing many more offer dates or “no offers before”, as listing agents try to ensure as many buyers as possible get exposure to the property to optimize value for their sellers. Ottawa has always been more of an “early-bird-gets-the-worm” type of market but listing scarcity and stronger demand are forcing more agents and sellers to hold back offers. Note: while multiple offers have certainly increased this year they are not the norm, generally only a small % (perhaps 5%) will see multiple offers and over listing price sales., although this may be higher in very high demand neighbourhoods. There is a tendency for some in our industry to be over enthusiastic and make it sound like every property is selling overnight and with multiple offers and an over list price result. This may lead to faulty expectations and perhaps some impulsive buying and selling decisions.
The average days on market to sell a property (though improved) is still 40 days for residential properties and 60 days for condos.
So it is a strong market which brings some different challenges than we faced a year or two ago and buyers and sellers are encouraged to stay engaged with their industry professional to be fully on top of the market dynamics.
Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692 or 613-371-9691 (mobile)
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