Ottawa real estate news, discussion and inside broker information brought to you by Gord McCormick, Broker of Record and Dawn Davey, Broker 613-435-4692 firstname.lastname@example.org www.oasisrealtyottawa.com
…but of course! It’s 2020. Ottawa real estate ended this unusual year with a very strong December. Monthly sales leaped 32.4% in Dec 2020 vs the same month in 2019. While December and January are typically the two lowest sales months of the year ; the sales recorded in December of 1,002 actually outstripped April where only 913 total properties were sold. April is normally the 3rd busiest sales month (after May #1 and June #2) but the arrival of the pandemic in March really put a damper on April sales this year. Sales decreased in April 2020 by 55% vs 2019.
Price increases largest in almost 40 years: One has to go all the way back to 1983 to find a year with larger % price increases than our market has seen this year. On a year to date basis, residential properties average selling prices averaged $582,267 up 20% vs last year and condos sold for $361,337, up 19%. In 1983, a 21.3% price jump moved the average selling price from $71,080 to $86,245.
Super low listing inventory and mortgage rates helped fuel these price increases, plus we believe there has been an increase in out of town buyers, from other major centres.
Listing inventory: the cupboard is still pretty bare: Though the number of new listings has been increasing for a few months, the sales demand is absorbing those easily on the residential side, where the number of available properties is 59.2% lower than a year ago, suggesting there is no letup in sight for bidding wars and above average price increases, The condo market is in slightly better position for buyers, as we end the year with 26.6% more listings than we did a year ago.
Unit sales increases not staggering for total year: With a strong 2nd half of the year, we finally recovered the big decreases in April (-55%) and May (-44%) in unit sales and ended the year with total residential unit sales up by 3% for the year, while condo sales were 1.5% lower than 2019.
What will 2021 bring? Royal Lepage is predicting that Ottawa will continue with solid average sales increases of 11.5%, while Re/Max sees more moderate price growth of 7%, so stay tuned!
Gord McCormick, Broker of Record Dawn Davey, Broker 613-435-4692 email@example.com www.oasisrealtyottawa.com
Are these key indicators suggesting a market shift in Ottawa real estate?
Will we look back at the fall of 2020 and say: “yes, we can see the beginning of the market change in the results posted in September and October?
New listings surge in October: For the 3rd straight month, new listings continue to increase significantly, compared to a year ago. Fortunately, unit sales increases have mostly absorbed these new listings and our sellers’ market continues, as does historically strong price increases.
New listings for residential properties were up 47.9% vs last year in the month of October, though were slightly less than the number of new listings recorded in September, so the typical seasonal easing pattern seems to be taking place. New listings were up 18.4% in August and 31.8% in September.
Condos on the other hand, registered an increase of 69.8% in new listings in October after posting 45.3% and 41.4% gains in the previous two months.
Listing inventory at month end: The total of residential listings available for sale is 45.7% lower than a year ago and represents approximately only one month of expected sales, which is still very low. A more typical balanced market would have us with something like 2.5 to 3.5 months of expected sales on hand.
The number of condo units available to start November are 15.4% higher than a year ago, and equate to approximately 1.5 to 2 months of expected sales.
The most surprising stat of all: With all the recent history of bidding wars and rapidly escalating prices, one would expect that we have had a runway year in total sales…. but guess what? Though we have registered some strong unit sales increases in the last couple of months, the year to date numbers may surprise many. The total number of residential sales sold* via MLS® shows that we are dead even with the same point in 2019. The number of condos sold year-to-date through October is 5% lower than last year.
Why is this?
We had a major sales drop in two of our 3 biggest sales months in April (down 55%) and May (down 44%) at the start of the pandemic and have gradually made up that shortfall.
Also, we believe that a slightly larger number of properties are being sold “off market” by exclusive listings and other private or FSBO, sales that do not get captured in MLS™® stats published by the Ottawa Real Estate Board. (OREB) While these types of transactions have always occurred, we believe the % may have ticked up, due to the scarcity of listings and the desire for some sellers to avoid the volume of visitors generated by an MLS® listing, during the pandemic.
Sales to new listing ratio still indicate sellers’ market: This ratio is used to roughly approximate the overall market, as being either a “sellers’, “buyers’ or “balanced” market.
A sellers’ market is said to be occurring when the ratio exceeds 60%.
If the ratio is between 40% and 60%, we are experiencing a “balanced” market with a roughly equal number of buyers and sellers.
If the ratio is below 40%, then we are in a buyers’ market, with more sellers than buyers.
Our current ratio based on October 2020 sales in Ottawa shows the following:
Residential sales: 85.9% sales to new listings
So both are still showing sellers’ market conditions, though condos are slipping closer to a more balanced market, which favours neither buyers nor sellers.
What’s ahead? Sales typically start to ease in mid-November, as our seasonal pattern shows that December and January are the two slowest sales months of the year…but it’s 2020…so who knows? We still have a strong sellers’ market for residential properties, while condo sales seem to be trending towards a more balanced market. Both buyers and sellers will want to keep a close on market trends and new construction buyers, especially will want to assess their risk tolerance for purchases that will not conclude until late 2021 or even in to 2022.
Are prices going to drop?
The economic fallout from the pandemic, has yet to drastically intervene in the real estate market (though there are signs in the condo market, especially in Toronto) , other than to drive mortgage rates down, which has only further fuelled demand. One has to believe our significant price increase percentages will have to slow eventually, as we are on a pace of home price inflation not seen since 1983. Year to date average prices are up 19.4% for both residential properties and condos this year.
Keeping a close eye on the supply and demand factors (sales, new listings, overall listing inventory) will help gauge whether we are seeing a distinct market trend which may balance supply and moderate price increases or in the extreme case, where supply grows significantly and outstrips demand which then results in downward or at least flattening of prices.
Our market tends to be buffered from the larger ups and downs in prices, experienced by some other cities and if fact, we have only seen an annual price decrease 5 times since 1956 and the largest of those was only 4.3%, way back in 1961 and the other years were in the 1-2% range.
Make sure to check all your assumptions with up to date market data, before completing a buying or selling plan and your Realtor is your best source for both data and front line day to day experience in the market.
Ottawa’s market continued red hot through August with the average selling price of residential properties during the month rising 22% from a year ago to $592,548. Residential sales recorded a 21.8% increase in transactions, while condo sales grew at just over 2% but recorded at 24% increase in average selling price to $383,640.
Some good news on new listings….but… We had our strongest month of the year for new residential listings which grew 18.6% vs 2019 but alas, residential sales growth pretty well absorbed all those new listings.
New condo listings for the month were also up 41.4% for the month.
Month end inventory still scarce for buyers: At month end, we still have a huge deficit with residential properties down 49.8% vs August 2019 and the number of condos available for sale down 17.6%. Though each grew slightly from the figures posted at the end of July this year.
The only significantly growing month end inventory area is rentals which were up 31.6% vs a year ago.
Key performance indicator: sales to new listings ratio This metric compares the number of new listings during the month to sales. In August 2020 this ratio came in at a super high 83.2% for residential properties and 72.5% for condos. A balanced market would see this ratio in the 40-60% range. By comparison, the Toronto Real Estate Board, reported a sales to new listings ratio of 58% and with a surge of new listings of 56.8%.
Do I buy? Do I sell? Do I wait? Tough conundrum on many levels for those considering a move in real estate. Will the economy worsen? What factors am I risking by buying or not? Will prices ease, if the economy softens or will government spending and support programs keep the economy rolling and with cheap mortgage money and scarce inventory of housing, the average house has been going up some $20,000 per quarter in 2020. Am I a fool to miss out on this market?
Aug 2017 vs Aug 2020 pricing snapshot: Can you believe that the average residential selling price in Ottawa only 3 years ago during August was $420,337. This means average selling prices have grown 40.9% over just 3 years when comparing this August 2017 figure to our current month which saw an average residential selling price of $592,548.
Still room to grow? This seems super high by Ottawa standards but when one compares it to Toronto at $951,404 and Vancouver at $1,038,700, our prices still seem to offer pretty good value. Our blended average price, once condos are added is $542,872 during August
No one has a crystal ball? We all wish we could accurately predict where this market is headed and it could certainly take some widely divergent directions. While one intuitively, cannot see these kind of price increases continuing, our market is still growing and our price levels are still significantly lower than major centres.
We do not yet have the Municipal Land Transfer Tax (MLTT) or the Foreign Buyer Tax or vacant property tax, so that makes our market attractive for foreign investors. There is some concern that immigration may stall with COVID and limited housing requirements for new Canadians or those with visas coming to study or work here.
Will the Federal Government follow through with the rumoured capital gains tax on (some?) residential home sales?
New government in town? Government action (or lack thereof) can have a profound effect on housing and our Ottawa market is even more reliant on government activity than other markets. If the current Federal government minority continues with its social aggressive benefit plans and other spending, our market should continue to rock and roll. We believe that for every government headcount added, at least one more job or full time equivalent is added in the private sector. Should a sea change on spending occur at the Federal level due to political pressure or a change in government, then one might expect some kind of budget tightening exercise which could impact Federal headcount and program funds. Every headcount lost also has a ripple effect in the Ottawa economy, too and further dampen market outlook.
On the surface, the current Liberal-NDP coalition seems likely to likely to continue which probably means good news for Ottawa real estate. But as the 1990’s demonstrated in spades, even Liberal governments have to wield a budget axe, if sufficient political and market pressure is applied and that is another scenario we would prefer not to encounter again.
Even if our market plateaus or flattens, Ottawa is still a very safe and reliable real estate market. Prices tend to be “sticky” (i.e they don’t drop that much, regardless of market conditions) What tends to happen is that the whole market simply stagnates, demand dries up and the number of sales transactions drop, should economic or job uncertainties appear to be greater or banks or governments tighten lending practices.
Buyers and sellers will have to assess a lot of factors in making their decisions and Realtors are here to help with the most up to date statistics that can help make better long term decisions. The key stats to follow are the sales to new listings ratio and the overall listing inventory, as these will often signal a swing in market supply and demand factors.
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 continues to baffle just about everyone. While sales plunged again in April, (transactions were down 44% vs May 2019) average selling prices surged 11.2% for residential properties and 15.5% for condos. So what gives?
Listing inventory down by 50.4% The number of listings available dropped an incredible 50.4% from the same time a year ago. Compared to May 2015 (much slower market then) available listings are 81.4% lower…that represents over 8,000 fewer listings! No wonder buyers and their representatives are pulling their hair out and we are still seeing fairly significant multiple offer activity.
New listings also down significantly: New listings during the month were also down almost 50% vs last year, with 49.2% fewer residential properties being listed and 47.2% fewer condos, so there is no let-up in sight and no sign that listing activity is strengthening. Anecdotally, some realtors report having lots of listings ready to go but these sellers cannot find anything to buy.
Average prices up strongly for the month and year to date: The average residential property sold for $548,140 in May, an increase of 11.2% over last year. The average condo sold for $343,589 a 15.5% increase. On a year to date basis, the average residential selling price is up 13.8% and the average condo is up 17.8%.
Dark Forecast from CMHC and toughening of mortgage qualifying July 1. Contrast these statistics with the gloomy forecast by CMHC (the federal housing experts) who have predicted a 9-18% price drop (over the next 12-18 months) and you can see why many buyers must be confused that instead of a COVID-19 “discount”, prices continue to escalate on the back of dwindling supply.
CMHC warning: On top of their prediction of a 9-18% national price drop over the next 18 months, CMHC also announced several new measures restricting qualification for insured mortgages. (those with less than 20% down) These changes are fairly significant and one mortgage industry source has suggested that this will curtail buying power by between 9 and 13% for this category of homebuyer. This will likely seriously impact the first time home buyer market and as they account for something like 30 or 35% of sales, this could really hurt the market. If the supply of new first time buyers dried up, how can those who wish to move up to a larger home to so, if there are fewer buyers for their existing home. This bears close scrutiny in the months to come.
Expect a wild June: With the tightening of the CMHC qualifying rules, low cost of mortgages and low listing inventory levels, we can expect to see a wild month of June with lots of bidding wars and frantic activity, as many buyers seek to get a deal done prior to the July 1st cut-off date for the new CMHC rules. (Happy Canada Day, eh?)
Golf Analogy: “hit the ball where it lies” The best way to tackle this market is not to have too many pre-conceived notions about how the market should be functioning but rather playing to the market conditions. Just because some headlines are blurting doom and gloom, doesn’t mean those are correct, so play your shot according to the conditions you see at the time of sale or purchase and your Realtor is your best caddy for helping you make a good score! If market indicators shift then one can adapt to the changing conditions.
Gord McCormick, Broker of Record Dawn Davey, Broker Oasis Realty Brokerage 613-435-4692 www.oasisrealtyottawa.com
Just released February results show a continuing and worsening trend in listing inventory shortages in Ottawa real estate. A relatively strong unit sales increase of 13.9% was recorded during February and average selling prices shot up over 20%, as a result of strong demand and bidding wars on properties.
Prices: Average prices for properties sold in February soared 21.1% for the average residential property to $563,694 and the average condo sale recorded was up 21.3% to $349,813.
“FOMO” creates Bidding Wars:
Once a bit of a rarity, this is pretty much the standard in the current limited inventory market. The Board press release quotes that 58% of properties sold in February were as a result of multiple offer/bidding war situations up from 32% a year ago.
While many do not like aspects of the “holding offers” bidding war process, it is really somewhat unavoidable, as one cannot really know what market value is going to be, unless all buyers have a chance to consider a new listing. This can only happen if at least a few days are set aside and provide for reasonable opportunity for buyers to visit the property, while accepting offers at a pre-specified day and time.
There is also the natural inclination for a seller to experience FOMO (fear-of-missing-out) if they do not wait for a reasonable number of buyers to tour the property and accept the first interested buyer offer. The only way to mitigate the potential of “maybe-I-listed-too-low” thinking, is to establish an offer date and hope to hear from a reasonable cross section of potential buyers.
Less than 1 month of expected sales in inventory:
Our current listing inventory levels are pretty anemic, with residential properties available for sale down 36.7% vs 2019. Condos are even worse, at 60.7% lower than last year.
This means we have less than one months’ anticipating sales on hand, so March would be a great time for someone to get their property listed. In a typical balanced market, we have something in the neighbourhood of two months anticipated sales on hand to start a month.
New listings levels:
no sign of help on the horizon. No sign of any significant bump in new listings coming on the market, either, as new listings for residential properties in February were down 9.9% compared to the previous year. Condo new listings were up slightly by 2.5% vs 2019 but given how few condos are available (60.7% below a year ago) this is not enough to help balance supply and demand.
Rentals an interesting part of the market:
The only listing inventory category where we see any growth is in the rental property category where listing inventory is up 31.3% vs last year and new listings during the month were also up 38.3%. This is an appropriate inventory level however, as Board members have assisted in almost 500 rentals in the first two months of the year an increase of approximately 40% from a year ago.
Whether this large increase is a result of Airbnb owners moving properties in to the long term rental market due to the pending new City rules, remains to be seen but is probably somewhat a factor.
Unless there is an unusual economic event or a seismic shift in Federal Government policy or makeup, it looks like we can expect more of the same from the Ottawa market this spring. In fact, we are right at the start of the peak spring market which gets revved up in March but really kicks off in April with the start of government and military moving season. While this creates a bump in new listings, sales also surge upwards by 50% from February to March and another 50% March to April.
Most will think that Realtors must be rejoicing in this sellers’ market and that it is just a matter of fast sales and big commissions. Must be “easy street”, right? In reality, I think we would find that the larger % of real estate professionals would be happy to see a more “balanced” market that features a more equal number of buyers and sellers. While it is true that listings sell quickly and for top dollar, there are many aspects to this market that cause Realtors heartburn, if not heartache.
Not a lot of listings to go around: At the end of January 2020, there were something like 2,100 residential listings posted on the Ottawa Real Estate Board. When you compare that to almost 3,100 members that means there are not a lot of listings to go around. Given the real estate mantra of “you list to exist”, this means many Realtors are scrambling for fewer listings and those listings sell quickly, so the marketing reach and prospect generation value of those listings is very limited. If fewer listings=fewer sales, then despite rising prices, there may be fewer commission dollars being earned out there by many Realtors.
Being on top of new listings and immediately available for showings: Finding a property for qualified buyers, always has its challenges but these are magnified 10 times in this sellers’ market environment. Buyer agents have to be really on their toes and alert to pending listings and being available to immediately get their buyers in to see new listings. The watchword in this market is “you snooze, you lose” and if a buyer misses a property and their perception is that it is their agents’ fault, the agent could potentially lose that buyer. This results in buyer agents doing a lot of “one-at-a-time” showings, whenever a new property of interest comes out on the market, which is pretty time consuming and may require a lengthy search period, particularly if buyers have a pretty tightly defined geographic, property or price point criteria.
Many showings and offer submissions: The supply/demand imbalance has resulted in multiple offers in 35-50% of listings, so buyers’ agents invest a lot of time in researching listings, doing showings and preparing offers on properties, only to lose out to other more aggressive buyers/agents. This can be very disheartening and frustrating for buyers.
No time to decide and hasty decision making: Buyers often get only one chance to view a property and after a 30 to 40 minute visit then make a critical decision on their largest purchase? This alone has pushed the numbers of conditional sales that fall through to double or more the regular rate. (easily 10% of conditional sales are falling through over the last year)
How do you figure out a price in this “crazy” market? Buyers and sellers count on Realtor expertise to establish appropriate list prices when selling and also what offer price (and terms) is necessary to be successful in submitting an offer on a listed price for a buyer. The listing side is somewhat easier, in that the market and collective buyers will determine the market value, so there is less pressure on the listing agent.
Realtors normally do extensive research on comparable properties sold but in this market, much of it becomes old news and even a sale a month ago, may no longer be very useful in providing guidance on what to offer for buyers on a current listing. If buyers are not successful over a period of time they may choose to blame their Realtor or they may refocus their search in a different geographical area or property type that is not as readily serviced by the buyer agent. Ie. New construction, out of town properties.
Temptation to go “all in” with a “no condition offer” Though highest price still generally rules, offer terms are always a critical component and a totally “clean” offer with few/nil conditions, is bound to surface in the most sought after listings. Most sellers don’t mind waiting for a week or so if the price offer is significantly better but many are happy to know that they accept the offer and their house is sold. This is why we see so many listings with offer dates then showing up as “sold firm”, the next day after offers are due.
We had a buyer last year, who actually offered $25K less than at least one other offer but our buyer won, since our offer had no conditions and a 30 day closing which was a critical factor for that particular seller. This place was a total fixer upper and not including an inspection clause, was a risk our experienced reno buyer was prepared to accept. Many buyers (and their agents) are just not able to do this and of course, the risks can be significant.
New construction sales are very strong: Though we don’t have proper stats on this, we believe there are a larger % of sales being done in new construction than normal right now. This is partially due to the limitations on resale listing inventory and also the fact that new construction options are plentiful and widespread. (though delivery dates may be getting pushed out by some builders)
Buyers actually start gaining equity, the day they sign their builder sales agreement, even though their possession date may be a year away. Those with existing homes to sell, are effectively “double dipping”, as both the new construction property “on order/to be built” is gaining in value, as is their existing property which they will only sell close to the possession date. With prices rising 8% or 9% in 2019 and 5% or 6% forecast for this year, these homeowner/buyers are earning a nice tax free equity bump on both properties.
A surprisingly small % of new construction sales involve Realtors (perhaps as low as 15 to 20%) where resale buyers are represented by Realtors at least 80% of the time. On top of that, builders do not offer the same level of Realtor compensation, as do MLS® listings, so Realtor paydays are much less when their buyers are buying a new construction property.
Builder compensation for Realtors tends to ebb and flow with the ups and downs of the market. In tough times, builders are mostly happy to see buyer agents with their buyers but in this market, most builders view Realtors as a cost factor to be minimized or eliminated.
Managing showings and multiple offers: Listings are getting a lot of attention, of course but this can put a load on a listing agent. Lots and lots of showings, phone calls, texts and emails from prospective buyers and also buyer representatives. There are strict rules to follow in properly and fairly managing offer processes and this takes a lot of organization and discipline on the part of the listing agent. While it is fun to provide an over list price offer to your seller, having to make the calls to other agents whose buyers were unsuccessful is not nearly as much fun.
Buyer agents can be very aggressive in representing their clients and this can result in some not so fun moments, too.
Managing “bully” offers (those submitted prior to offer date) and multiple offers can be challenging. Any time there are many losers and only one winner, frustration and tension can be high.
Overlapping showings: As a buyer representative, one is almost always stuck with overlapping showings with another buyer agent and their buyers in the property in the same time window. Normally, this is not too difficult to manage but with the volume of showings on many properties right now, it can be tough to get an appropriate amount of time to have a really good look at a property in private and communication between agent and buyer is constrained when others are also in the property.
So while our challenges in this market are vastly different and more positive than the other side of spectrum in a buyers’ market, it is not all easy days and big commissions for Realtors in this sellers’ market. Your Realtor will have adapted to these market conditions and help you navigate these oft choppy waters.
Ottawa has a hot sellers’ market in real estate right now, with limited listing inventory and price increase levels we haven’t seen since the advent of super low mortgage rates almost 2 decades ago. New construction homes have similarly been enjoying significant sales success and similar price bumps. Unfortunately, we do not have stats to track new construction sales or average price increases but let’s assume they are going up at least as much as resale homes which is approximately 9% year-to-date for both residential and condo sales.
Double dipping: With increased unit sales and some labour shortages, builders are stretched to deliver the volume of possessions, so lead times have been extended and customers are generally having longer waits for their new build home. *though there are many spec homes being built and sold with somewhat shorter delivery times. It is not unusual for a new home buyer to wait a year or more, for their new home to be ready for occupancy.
In this rising market however, that is not a totally unhappy circumstance for buyers. The first time buyer has longer to save up for a larger down payment or for other costs, such as window coverings, appliances, furniture, etc.
The new home buyer who also has an existing property, is really “doubling down”, with both their existing property and the new build property appreciating in value at the same time. Depending on how much down payment the builder requires, the new home buyer may be seeing as much as a doubling of their down payment amount in increased equity on the new build, before they even move in!
So it should be a “no-brainer”, right? With expectations of at least another 5-6% increase in overall average selling prices in 2020, (perhaps more in entry level and medium price points) buying new construction certainly appears to be a pretty safe bet, provided the future delivery of the new build is not too far out there. No one has a perfect crystal ball, so it is tough to be sure what the markets might look like 18-24 months from now. Some may remember that many buyers in Toronto got burned in recent years when, prices levelled off or even dipped which caused them to be underwater on their investment.
Things to remember about new construction purchases: Builders typically want 10% or more down on a purchase(at time of signing), so this can run in to a fair amount of cash and buyers will have to have a good financial plan to manage this down payment.
Getting a handle on new construction total costs is often a bit of a challenge, as typically one can’t get 100% accurate upgrade costs, until they have already “signed on the dotted line” for the base price of the property. Parking costs and storage costs are also extra in almost all new condos, too. This requires some flexibility in budget or buyers can find themselves compromising important upgrades to keep the overall costs within desirable parameters.
The market for new homes is very competitive, so just like resale, the “you snooze-you lose” premise is very much a factor. The couple in the sales centre at the same time as you, may well write the cheque for a “hold” on a specific lot or unit, while you are still touring the model home.
Few incentives on the table: Builders have adjusted their incentive programs for both buyers and Realtors, so the type of bonuses available only 3 or 4 years ago are long gone. Don’t expect to be able to negotiate much of a “deal” (if any!) in this sellers’ market. If your Realtor is less than enthused about your interest in a new construction purchase, it may be because the financial remuneration they receive is slim or none, for assisting you with that purchase.
Beware the “boiler room” environment in new home or condo sales: New lot releases and new subdivision or condo launches can be a good time to try and be first in the queue to secure most desirable choices within a development or condo. However, many times, these events are super hyped and promoted with the “buy-now-or-lose-it” pressure of a timeshare selling environment which can contribute to some hasty or ill-informed buying decisions. Condos can be the biggest example and are typically also the furthest down the road on the delivery date. This can provide a major risk to buyers, if the market changes, before that condo is built.
We have seen recent examples where some new developments are already “sold out” even though the planning approvals have not yet been received. Changes to accommodate planning requirements can make changes to what buyers have actually bought and may not bring pleasant news to buyers who thought they were doing the right thing by buying first.
Delivery timelines dictate selling of existing property: Those who are “double dipping” will eventually have to sell the current home and delivery timelines are out of the buyers’ control. This can lead to some awkward timing in selling an existing property, to coincide nicely with the possession date of the new build. For example, a February or March possession date, probably means listing in December which is not the best time to be selling for most. Delays can also push out possession dates by 60-90 days and though builders are usually very good about meeting their delivery dates, things do get delayed for a variety of reasons.
No guarantees: Many new construction buyers have done very well in recent years, particularly those that bought in tougher markets back in 2014 or 2015 when builders were anxious to do a deal. Though the short term looks very positive for those interested in this form of “double-dipping”, there can be no guarantees when trying to guess on future market dynamics or complexities.
Remember, there is typically no cost to utilizing a Realtor’s services and expertise with your new construction plans, so don’t miss out on what could be invaluable 3rd party advice and counsel.
The Ottawa Real Estate Board (OREB) results for November show another strong sales month, despite the early onset of wintry conditions. Unit sales and average home prices both approached double digit gains, compared to November 2018. The market shows no trends of flattening out, except for the usual seasonal fluctuations.
Key average price milestones reached this year: The average detached home price has sold this year for $510,975, an increase of 8.4% or $39,693, breaching the $500K mark for the first time.
The average residential row townhome has sold for $408,905, an increase of 9.8% or $36,620, topping $400K.
The average residential semi-detached home has sold for $489,656 an increase of 9.5%. or $42,447
The average condo sold this year has topped $300,000, coming in with a 9.1% price increase to 303,817 which is up $25,459 from a year ago. Apartment condos lead the way with an average price of $324,459 up 5.7% while row units and stacked condos also showing similar $ price gains at $268,613 and $274,860 respectively.
Listing inventory continues to languish: The number of new listings in November are pretty flat with a year ago, so while they are not getting any worse, they are not improving, either. This means our supply/demand imbalance should continue for the short term, at least-given the strong sales demand.
At the end of November, our residential listing inventory was 22.6% lower than last year at the same time and condo listing inventory was 43.9% lower.
About the only listing category that was higher was the number of rentals that are MLS® listed, which are up 53.9% vs 2018. Year to date rentals done via MLS® are basically flat vs last year, so that category is not seeing the same growth as the resale market.
City policy on short term rentals may put more inventory in the market:
Though there will no doubt be ongoing appeal action via OMB or other legal avenues, there could be a slight bump in available listing inventory and long term rental properties, from investors losing their ability to rent their (non resident occupied) properties via Airbnb or VRBO. Numbers are not readily available of how many housing units fall in this category but this could have help the condo and urban market inventory where most of the short term rental properties are located. Airbnb totalled some 4,600 listings in Ottawa over the last 12 months, so the number of investors involved might easily be 500-1,000 (or more) which would be welcome in the long term rental or resale markets. Stay tuned!
New home construction: New home sales continue to flourish and with the upward trajectory in the market, many new home buyers feel they are kind of “doubling down”, in that both their current home and the one “on order” or “to be built” are appreciating in price, while they wait for the new home possession which typically is 8-12 months or more, down the road.
Cost of waiting makes buying even more expensive: Strong markets like this make it tough on all buyers, particularly first time buyers and those that are “fence sitters”, who are considering a move but don’t really have a compelling reason to do so, until they find the “right” property. The upward price trajectory, however, makes the cost of waiting potentially significant. For example, even if current prices only increase by 6% over the next months (a Re/Max projection for Ottawa), the average prices overall could look something like this:
The average detached single home will jump to $541,633 and a further hike of $30,000+ over current prices.
The average two storey single detached home could top $600,000 next year, with a 6% hike from this years’ average price of $567,456.
The average townhome would jump to $433,439 up $25,534
The average condo would increase to $322,026 overall and the average apartment condo to $343,926, each up almost $20K.
This means more down payment needed to qualify for appropriate financing, more to generate 20%+ down payment for investment properties, higher land transfer and mortgage insurance costs and a longer period to pay off mortgages taken out against these purchases.
These also represent only “average” price increases and higher priced properties could easily be going for $50-$100K more in the immediately foreseeable future, especially, if the current inventory shortage continues and the market generates another 8-10% price rise.
The Ottawa real estate market just keeps rolling along, with another double digit sales increase recorded in the month of October and continuing listing inventory shortages, with less than 2 months of anticipated sales currently on the market.
Residential unit sales for the month were 16.9% more than October 2018 and the number of condos sold was up 23% during the month.
Monthly average selling prices upward bound: The average selling price of a residential property during October was $483,405 an increase of 7.6% over last year and the average condo sold for $319,208 which was up 18.3%. On a year to date basis, the average residential price is up 8.3% and the average condo is up 9.1%
Listing inventory continues to slide: Residential listings are down 22.3% vs last year at the same time and condo listing inventory is down a significant 38.8%. New listings are not taking up the slack and are pretty flat vs last year, so our increasing sales continue to chew through available listing inventory.
Our number of listings currently available, is less than 1 per Realtor member of the Board.
36% of homes selling above asking: This is a great new stat the Board is tracking and providing, so members and consumers are aware of the real degree of multiple offers. So while it is quite common, it is not happening for every listing. The Board noted in its release that in Oct 2018, only 21% of homes sold were sold above listing price, so our continuing inventory shortages are creating more competitive offer activity, although it should also be mentioned that a high % of listings are holding back offers, which can create a multiple offer situation.
Election fallout? With the minority Federal government coming out of the election, it is highly unlikely the local economy will suffer, as both the Libs and NDP try to out-left one another, which only means more program money and staffing in the National Capital Region. So our local economy should continue to be quite healthy for the duration of the minority government.
Recent job numbers:
Ottawa’s unemployment rate dropped to 4.2% in October, the lowest it has been since 2007, yet another positive indication that the bull market in real estate should continue in the short to intermediate term, those planning a move may consider acting on their plans, as that home under consideration may well cost $30 or $40K more next year.
Normally the start of hibernation period…but perhaps not this year? Mid November is normally when real estate activity eases seasonally and troughs out for 90 days or so, until we get through the worst of winter and then things get brighter and more active mid-February on. This market, however, should continue to post gains, though the seasonal slump should still occur as usual.