Is there a shortage of quality listings in Ottawa real estate?

 

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.

Bottom Line:
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

www.oasisrealtyottawa.com   oasisrealty@rogers.com

One of the highest ranked and “liked” real estate pages:  https://www.facebook.com/oasisrealtyottawa/

“all the real estate news that’s fit to tweet”  https://twitter.com/OasisrealtyOTT

One of Ottawa’s best real estate blogs: http://blog.oasisrealtyottawa.com/

A full service, lower commission brokerage

Multiple offers puts additional stress on all parties

lots of twists and turns but ultimately only one across the finish line
lots of twists and turns but ultimately only one buyer gets the prize

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!

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

One of the highest ranked and “liked” real estate pages:  https://www.facebook.com/oasisrealtyottawa/

“all the real estate news that’s fit to tweet”  https://twitter.com/OasisrealtyOTT

One of Ottawa’s best real estate blogs: http://blog.oasisrealtyottawa.com/

A full service, boutique brokerage with lower listing fees

Why “discounter” shouldn’t be a dirty word in real estate

do discount brokerages work?
do discount brokerages work?

We took a different path from most in organized real estate when we started our own independent brokerage. We had previously worked with two large international franchise brokerages and felt we could offer a very viable service at much lower commission than is necessary to support the infrastructure a large franchise brokerage requires.

We have done this successfully for 10 years now and our sellers pay 20-40% less than the typical 5% commissions charged by most of those working for brand name brokerages.  This can add up to thousands in $ commission and HST savings for those who work with us, particularly as house prices continue to rise.

How we can do it:
We have been able to provide excellent service and save our sellers a lot of money because we don’t have the overhead of the corporate franchise structure, so we can afford to provide the same level of service at a much lower price. Sounds like a win for the consumer, right?

So what’s the problem?
The problem is far too many consumers are led to believe that “discounter” is a dirty word (if not even a lower life form!) when used to describe a salesperson/brokerage that does not charge the more typical 5% commissions. Somehow the perception has been created that such brokerages offer lower levels of service and are “not as good” as the higher priced brokerage.

Realtor school 101:
Within the first month or two a new Realtor will attend a seminar or sales meeting on “handling the commission price objection” and they will all be taught the similar FUD (fear-uncertainty-doubt) to explain to a prospective seller why they should pay a much higher fee rather than go with the lower priced service provider.

“These firms don’t last long”

“These firms don’t advertise”

“Other Realtors won’t sell your listing”

“You get what you pay for”

Without going in to detail, these types of statements are simply untrue and disparaging a competitor in this fashion is contrary to Realtor codes of ethics and may be anti-competitive, too-yet it happens every day over kitchen tables, in blogs/websites and on radio shows… “ya gotta watch some of these discounters” might even be a tag line for some 5% Realtors.

Who wouldn’t like lower commissions?
Our experience tells us that most consumers would like to see lower commissions yet many are afraid to embrace the dreaded “discounter” because of continued fear-uncertainty and doubt spread by the higher priced agents.

Shop your local, independent brokerage!
Smaller and independent brokers are more likely to have a viable and lower cost MLS® listing model, since administrative, management and franchise fees are all lower for these firms and there are many good smaller brokerages here in Ottawa.

So if you believe that real estate commissions should be lower then don’t be swayed by corporate FUD and choose a lower commission or discount broker for your real estate needs. Many firms like ours are out there and offer some innovative service models that might work for you….so don’t be afraid to work with a non-name brand firm or affiliated Realtor.

To take advantage of our low cost programs for full service MLS® listings or buyer representation services, give us a call at 613-435-4692 or check us out online at the co-ordinates below. Excellent preseason listing rates of only 3% or 3.5% currently in effect.  The cash you are saving is your own!

(subject to change without notice, some conditions apply, not intended to solicit existing listings)

Gord McCormick, Broker of Record
Dawn Davey, Broker Oasis Realty Brokerage
613-435-4692 or mobile 613-371-9691
oasisrealty@rogers.com oasisrealtyottawa.com

One of the highest ranked and “liked” real estate pages on facebook:  https://www.facebook.com/oasisrealtyottawa/

Follow us on Twitter for “all the real estate news that’s fit to post”  https://twitter.com/OasisrealtyOTT

One of Ottawa’s best real estate blogs: http://blog.oasisrealtyottawa.com/

A full service, boutique brokerage with lower listing fees

Will it be a “balanced” market or a “seller’s” market in 2017?

OLYMPUS DIGITAL CAMERA
Lots of these in Ottawa January 2017
Listing inventory is trending down which may indicate a market favouring sellers
Listing inventory is trending down which may indicate a market favouring sellers

Though January is typically the lowest sales month of the year, (along with December) there are some very positive trends in the current market.

Strong residential sales in January 2017:
Unit sales have been trending up steadily since April 2016 and January continued that trend. Unit residential sales were up a solid 16.6% for the month and overall residential and condo sales were 8.6% higher than the 5 year average for January.  Condo unit sales were flat in January but did sell at a higher price than a year earlier.

Listing inventory trending down:
This is a key category and indicator of overall market activity. We experienced several years (2013-2015) of increasing inventory levels which led to a supply/demand imbalance favouring buyers.  Starting in spring 2016 this indicator started moving in the opposite direction and moved in to a balanced position during 2016. See chart:
https://public.chartblocks.com/c/5895b4b79973d295631e48dc via @chartblocks

January 2015 listing inventory is 15.2% lower for residential listings and 10.7% lower for the number of condo listings, compared to a year ago.
New listings in January were 11% lower than a year ago and condo listings for the month 4.6% lower.

Balanced market or seller’s market?
If we continue the combination of higher unit sales with lower numbers of new listings and total listing inventory, then we may see more pressure on buyers and higher prices and move more towards a seller’s market.  This is what can occur when demand outstrips supply and can be characterized by shorter selling times, higher prices and the existence of more multiple offers on listings.  We have not had sellers market conditions (except perhaps at a neighbourhood level) for 4 or 5 years now, here in Ottawa.

We have also had reports of strong sales from builders on new construction and inventory homes.

Prices:
Overall average prices are not leaping forward, as has been the case for the last number of years but the trend suggests this could change if supply limitations drive prices up.

Bottom Line:
This is a very important time of year for both buyers and sellers, as market activity grows on a daily and weekly basis from now through peak season in May and June, so it is a good idea to get one’s plans in place and existing properties ready to sell.

These overall numbers may not apply to all neighbourhoods, so if you would like to get an analysis done for your own property or area, feel free to give us a call or call your Realtor. 613-435-4692

Gord McCormick, Broker of Record
Dawn Davey, Broker Oasis Realty Brokerage
613-435-4692 or mobile 613-371-9691
oasisrealty@rogers.com oasisrealtyottawa.com

One of the highest ranked and “liked” real estate pages on facebook:  https://www.facebook.com/oasisrealtyottawa/

Follow us on Twitter for “all the real estate news that’s fit to post”  https://twitter.com/OasisrealtyOTT

One of Ottawa’s best real estate blogs: http://blog.oasisrealtyottawa.com/

A full service, boutique brokerage with lower listing fees

When should I list my Ottawa home or condo? (part 2)

OLYMPUS DIGITAL CAMERA
Should I wait until summer to list my house?

This is a question we often hear and the answer depends on the individual homeowner circumstances and objectives. Quite often the “best time to list” discussion is determined by other factors but here are a few items to consider in a listing and timing strategy:

Spring is King:
The April through June period is by far our busiest sales time here in Ottawa and our ratio of new listings to sales is also strongest during these months. Competition is also the heaviest then as well, so sellers with overpriced listings may not realize it until it is too late to react to market feedback.

February-March are great lead in months:
Open houses are full of buyers in February and March, so this can be a good time to be listing also.  If buyer feedback suggests listing tweaks there is time to adjust before peak sales season.

Don’t avoid listing in Summer!
Contrary to real estate myth, the 2nd best selling season is July-September based on monthly sales.  While one often hears that “real estate is dead” in the summer and “things pick up in the Fall/after Labour Day” this is totally inaccurate when one looks at monthly unit sales history.  So don’t avoid listing in July or August, because of this Realtor equivalent of an old wives tale.

Listing timeline most often tied to purchase:
Quite often the listing timelines are dictated by when one can find their “dream home”. This can rarely be preplanned, as it is subject to the whim of what becomes available on the market and a buyer being able to successfully secure a purchase on that property.
A key issue in the purchase of a property is always the sellers’ timeline and desired closing date, so one cannot always pick when their new home will be available.

Resale property vs new construction:
Resale properties are typically available within a 45-60 closing time frame. New construction is typically much longer (except for inventory homes or model home sales) with 4-6 month lead times or longer.  This can especially complicate listing timing for a new built home that is going to close in January-March which means selling an existing home later in the year which is the slower time for the resale market.

How long will it take to sell my existing property?
Most are enthusiastic and assume their palace will sell very quickly and at the price they expect and plan for. This is quite often not the case, unfortunately.  Just over 40% of new listings sold on the Ottawa real estate board during 2016-so a fast sale is by no means guaranteed.  In fact, the average residential property took 56 days on the market to sell in 2016 and the average condo 70 days.

What are the competitive issues that will affect my sale?
The level of competitive listing activity from resale homes and new construction will vary by area and time of year but obviously have a huge effect on when and whether to list. Overall inventory levels have come down quite a bit over the last year, so this may be a pretty good year to list compared to previous years, assuming we continue to see the slightly better demand level we experienced in 2016.

Can I list my property now for a closing in 6 or 8 months?
Most resale properties close within 45-90 days of a sale on average, so by trying to listing for a much longer closing, one is decreasing the number of potential buyers and hence demand and possibly market value.

How do I “time” the market?
If peak sales are April-June, does this mean one should list in April? Or get a head start by listing in March?  Most properties look their best in mid-May or June, once leaves are back on the trees and gardens start to bloom, but is this too late to be listing?
If one thinks in competitive terms: the first person to list has the advantage of being available to buyers in the market at that time but also has the disadvantage that those listing later will be able to price their listings knowing the listing price of the earlier listing.

Do I sell first or buy first?
Age old question which varies with buyer circumstances and both have their pros and cons.  A high % of buyers with existing homes typically find their new dream home first and then put the existing property on the market but it is not unusual for someone to sell first, particularly if planning to buy in a high neighbourhood.

Bottom Line:
There are many factors which affect the timing and marketing of a property and a Realtor is best equipped to consult on all factors specific to an individual property and neighbourhood.

Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692 or mobile 613-371-9691
oasisrealty@rogers.com
oasisrealtyottawa.com

One of the highest ranked and “liked” real estate pages on facebook:  https://www.facebook.com/oasisrealtyottawa/

Follow us on Twitter for “all the real estate news that’s fit to post”  https://twitter.com/OasisrealtyOTT

One of Ottawa’s best real estate blogs: http://blog.oasisrealtyottawa.com/

A full service, boutique brokerage with lower listing fees

Moving to Ottawa? some things to know about real estate

ottawa-tulips-and-peace-tower

Average house prices mostly a bargain:
Those moving from the GTA or Vancouver will view overall Ottawa average prices (average residential selling price approx. $400,000) as a real bargain and that would be correct. Averages are just averages though and price ranges vary considerably across the city and the Ottawa real estate board reporting area. Urban residential price averages in 2016 were in the $600-$750K ranges and topped $1.2 million in Rockcliffe Village.

Geography:
Ottawa is quite spread out east to west along the Ottawa river some 45 km (Carp Rd to Trim) and about half that distance north-south. Dominate features include the Ottawa and Rideau River systems, the Rideau Canal and the “Greenbelt”, all of which have factored in Ottawa’s development. North of the Ottawa river is western Quebec, the Gatineau hills and the city of Gatineau. Realtors must be separately licenced/registered to practice in Quebec, so very few, if any, can provide services on both sides of the Ottawa River. Average prices are about $100,000 less on the Quebec side, so buyers should determine which province is of most interest from the beginning of their search.

Big difference between urban and suburban living:
Much of Ottawa’s residential growth over the last couple of decades has been at the fringes in the east (Orleans), west (Kanata and Stittsville) and south. (southwest in Barrhaven and southeast in Findlay Creek and Riverside South) Home prices have increased most in urban areas and this has fostered many condo developments and infill housing development in the highest urban demand areas.  We currently have several of the largest mixed residential urban neighbourhood projects in Ottawa history underway or planned.  These include: Wateridge, LeBreton, Greystone and Zibi plus numerous large (and tall!) condo projects.

High demand urban areas:
Westboro/Wellington West and Carling/Woodroffe area , Hintonburg/Mechanicsville, Civic Hospital, Glebe, Old Ottawa South, Ottawa East, Manor Park, New Edinburgh, Sandy Hill

Students, Students, everywhere!
Ottawa is a big education centre with over 80,000 full time post-secondary students (140,000+ counting part time) at University of Ottawa, Carleton, Algonquin, Cite Collegiale and St. Paul’s. This demographic has an impact on housing, entertainment, dining and the work force.

Transit oriented:
Ottawa has always been a transit oriented city with commuter ridership % among the highest in North America. The OC Transpo system has been built on a mix of dedicated transitways (bus only roads) and express bus lanes which connect urban and suburban commuters with the downtown core.

2018 brings Phase 1 of Ottawa’s LRT (Confederation line) which will connect 13 stations over 12.5 KM, including a 2.5KM tunnel underneath the downtown core. Phase 2 will expand the scope both east, west and south (Trillium Line) by 2023.

This has created a “transit oriented development” focus for city planners and a great deal of activity is planned around LRT transit hubs.

Greenbelt:
When one drives through Ottawa from the downtown towards the suburbs, the city seems to stop and then restart after large swathes of open space. This was created way back in the day when the original plan was to keep Ottawa within the borders of this “Greenbelt”.  Over time, persuasive developers found a way to build new communities beyond the Greenbelt and this is where much growth has taken place since the 1970’s.

Schools:
We have a gamut of schools at the elementary and high school level encompassing English, French and immersion programs from public, Catholic and French school boards. The widespread geography of Ottawa has become a bit of a problem in this regard, as demographics have changed school enrollment patterns and many schools are on the “to be closed” list due to lack of students while others are overloaded and still others have no local services at all.  Researching schools for both current and future requirements can be a key factor for many parents, so it is a good idea to review this early in your Ottawa home search to determine your geographic focus.

Real estate is local:
Every market is different, so be careful not to assume that things in Ottawa real estate will be the same as the market you are moving from. Housing types/styles, trends and key features and highest demand items in one local market may vary widely from those in another.

If you are relocating and looking for an experienced brokerage team to consult on your home or condo buying plans, we are more than happy to help! Give us a call at 613-435-4692 or check us out online at our co-ordinates below:

Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692 or mobile 613-371-9691
oasisrealty@rogers.com
oasisrealtyottawa.com

One of the highest ranked and “liked” real estate pages on facebook:
http://www.facebook.com/pages/Oasis-Realty-Brokerage-Ottawa/209265863918

Follow us on Twitter for “all the real estate news that’s fit to post”  https://twitter.com/OasisrealtyOTT

One of Ottawa’s best real estate blogs: http://blog.oasisrealtyottawa.com/

When is the best time to list my Ottawa property?

Here is a chart we have compiled from monthly Ottawa real estate board published unit sales results (residential and condo property unit sales/month) for the last 5 years. This demonstrates a pretty consistent annual pattern in the Ottawa market.

Spring is key:
April through June are typically our peak sales months and this will come as no surprise for most. Government employees are relocating and families looking for a summer closing and move before the next school year, give this season a major boost.  Each year Ottawa real estate handles some 800-1000 moves in to town by government personnel with an equal number moving away from Ottawa.  The highest % of these are military and RCMP relocations.

Summer surprisingly strong:
There is a significant myth that “real estate is dead in summer” and this table shows this is totally incorrect! July and August are typically the 4th and 5th busiest sales months of the year, so those who “wait until the market picks up in the Fall” are really doing themselves a disservice.

March, September and October:
These are “shoulder” or transition sales months. March activity is increasing for the busy spring and September and October are marked by erosion of peak demand heading in to the slower fall and winter season.

November-February:
Ottawa sales take a breather, as fewer people want to move during the winter time and seasonal vacations, holiday activity and weather all play a role in making house buying not quite as active. A lot of planning and preparation for the peak season can be done during January and February, so still an active period-just not as many sales.

Personal Objectives most important:
What dictates selling or buying times is often based on a specific property being available and this then drives the sale of an existing home. Those with homes to sell will want to consider their buying and closing timelines in a way that optimizes selling an existing property if at all possible. For example, buying a new home that closes in February means one is selling an existing property in late fall in order to co-ordinate the new home purchase.  This however, is not the best-selling market for the existing property-so the seller will have to take this in to account when doing their pricing and listing plans.

When will my property show best?
Most properties will not show their best until mid-May when leaves are on the trees and everything has “greened up”, so some may wish to time their listing (and photo) plans accordingly. For example, a house with a pool will look much more inviting when the pool is open and warmer temperatures occur.

Is my property ready to list?
It can take longer than one thinks to get a property in HGTV condition for listing and selling, so this must be planned in to the listing cycle.

Competition also a factor:
The quality and number of head to head competitors to the property being sold (both new and resale) also factors in to the timing decision.

How long will it take my property to sell?
Sellers will have to factor in both selling and closing time in to the planning timeline and these can vary widely by location, price point and property type.

Bottom line:
There are a lot of variables to be considering in the listing, marketing and selling process and your Realtor is best equipped to help facilitate the process and optimize results based on all these factors. If one is planning a purchase or sale this year, January and February are the ideal months to sit down and have a planning discussion with your Realtor and any other key 3rd parties ie mortgage broker, stager, trades people.

If you are not already working with another Realtor, we are happy to provide a no cost, no obligation market evaluation of your property to help you with your real estate objectives.

Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692 or mobile 613-371-9691
oasisrealty@rogers.com
oasisrealtyottawa.com
One of the highest ranked and “liked” real estate pages on facebook:
http://www.facebook.com/pages/Oasis-Realty-Brokerage-Ottawa/209265863918

Follow us on Twitter for “all the real estate news that’s fit to post”  https://twitter.com/OasisrealtyOTT

One of Ottawa’s best real estate blogs: http://blog.oasisrealtyottawa.com/

Fed/Brookfield IRP contract cuts Realtor commission to 3.7%

for-sale…does this cause a risk to those selling to relocate?

The federal government is cutting commission rates for Realtor services on the National Integrated Relocation contract (IRP) and Ontario Realtors will share a total of 3.7% for listing and selling a relocating government employee’s home, as of January 1, 2017. (down from the previous rate of 4.1%)

While some will cheer the move, it may not be quite so popular with relocating employees if they see a decrease in service levels or lower buyer agent interest in their listings, due to the lower compensation offered.

What are typical real estate commissions?
In Ottawa, typical commissions remain around 5%* with 2.5% going to the listing sales person and brokerage and 2.5% going to the agent and brokerage that represent the buyer. Commissions are highly competitive and are open to negotiation but most typical fees will be in this general area.* commissions are negotiable and can vary by the individual salesperson or broker and many do charge less, including Oasis Realty.

How does it work with the Federal relocation contract?
Brookfield Relocation Services (affiliated with the parent company of Royal Lepage real estate) manages the federal government Integrated Relocation Program (IRP) nationally and has done for many years. Just a few years ago, this program paid Ottawa Realtors 5% with the usual 2.5%/2.5% split.  On the last contract this dropped to 4.1%, with listing and buyer agents each receiving 2.05% over the last few years. (a decrease of 18%)

With the new fee/compensation structure coming January 1st at 3.7%, the listing representative and buyer representative will each receive 1.85%, if the 50/50 split continues (a further decrease of 9.7%)

Toronto is not Ontario and real estate is “local”:
We are not sure how these fees are established or negotiated but we strongly believe that “one size does not fit all” in real estate fees and by having one set fee for all of Ontario, this does not take in to account the vast regional and local differences. Toronto is its own market, as is Ottawa.  Smaller but important centres for Federal employees such as Trenton, Petawawa etc. may have an even bigger problem if their local prices and volume of transactions normally requires 6% fees to support.

While Toronto prices have continued on the elevator ride up to atmospheric levels, our prices in Ottawa have certainly not followed suit and even this year with solid unit sales our average prices continue to be pretty flat and at or below inflation level. So Realtors are not making up the difference in the average price of houses being sold here, as they might be in Toronto.

What risks might a relocating government seller be facing?
1) fewer Realtors may be interested in listing properties on the program, given the compensation level.
2) Realtors may also ask employees to “top up” the government paid fees, so they can achieve their usual %. This happens regularly today with those selling or buying a private listing or FSBO where a significantly lower commission rate is offered to a buyer representative.  The standard Buyer Representation Agreement signed by most buyers provides for the buyer paying incremental Realtor commission if the seller does not pay an agreed upon fee level ie 2.5%.
3) If one believes that Realtors are significantly “coin operated” then sellers may also see less interest from buyer agents in their properties, as those representatives may favour properties where the buyer representative commission is more robust. Getting paid 27.7% more on property “B” than government listed property “A” is a pretty compelling advantage.  This amounts to about $2,600 on the average $400K sale or purchase.
4) Listing agents will certainly have less budget monies for advertising and other costs to support their government listings when one considers they are also splitting commissions with their brokerage.
5) properties may take longer to sell if satisfactory “full commission” alternatives are available.

Bottom line:
Government employee sales will continue but there may be a few service wrinkles given the now “discount” fees being paid by the Federal government.

This commission change was hotly debated on a Realtor forum late in 2016, before the Board moderator cut off discussion on the issue, so there are clearly many who feel that this lower rate combined with their brokerage splits, dues/fees and other expenses makes this business less viable for them.

Oasis Realty Enhanced IRP Listing offer for government sellers!

We will offer a 2.5% co-operating buyer representative rate out of the 3.7% contract commission and this will ensure that the listing is on competitive ground with other listings in the area.  Since all Realtors can manage with a 2.5% buyer rep commission there is zero worry for the seller!
Any relocating government employee who has concerns should know we have a program that will totally eliminate any potential risk and in fact, will help make their property even more attractive. For details on our program or for a no cost, no obligation evaluation of your property, please give us a call at 613-435-4692 (not intended to solicit those with existing representation agreements)

Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692 or mobile 613-371-9691
oasisrealty@rogers.com oasisrealtyottawa.com

One of the highest ranked and “liked” real estate pages on facebook:

http://www.facebook.com/pages/Oasis-Realty-Brokerage-Ottawa/209265863918
For “all the real estate news that’s fit to post”  https://twitter.com/OasisrealtyOTT

One of Ottawa’s best real estate blogs: http://blog.oasisrealtyottawa.com/

 

Could Ottawa real estate be poised for a breakout year in 2017?

925-plante-sold-1With renewed local confidence and lots of government activity at all levels, 2016 was a turnaround year for the local real estate market and many key indicators suggest we could be in for a great year in 2017.

Positive key indicators:
Unit sales growth:
Unit sales improved by 6.3% overall with residential sales (which is 81% of the total units) increasing by 5.5% and condos coming in with a welcome 9.6% unit sales increase to the end of November vs the year before.
New listings:
The number of new listings decreased by 7.4% in the first 11 months of 2016 and this certainly helped move the supply/demand balance closer to a balanced market and away from some historically high inventory levels (and buyer’s market conditions) 2014 and 2015.
Current listing inventory at year’s end is about as low as it has been in 4 or 5 years and this is a very positive sign, unless there is a backlog of chronic listings that sellers have carried over the winter and will relist in spring.
Builder new construction sales:
The last report we have seen suggests that builders have had a good bounce back year and have recorded a sales increase of 15-20% which is great news, although may be influenced by a larger number of new projects coming online and adding to the sales numbers.

Neutral indicators:
Overall price increases:
The average residential property sold in Ottawa through November 2016 sold for $396,700 an increase of 1.2%. The average condo sold for $260,880 virtually unchanged from 2015.  These numbers continue the trend line in our market over the last 5 years where average prices have been mostly inflationary level.  These pale compared to the price levels and average price increases which dominate the news and online media that we hear about from Toronto, Southwestern Ontario and Vancouver but is simply a sign of our stable market and the fact that real estate is very local in nature.
Sales: new listings ratio:
Our sales to new listings in Ottawa through November 2016 stand at 40.9% by our calculation which is right on the borderline between a balanced market and a buyer’s market. (40-60% is considered “balanced” with lower ratios favouring buyers and 60%+ favouring sellers) With current lower levels of listing inventory this ratio should continue to improve and provide us with balanced market conditions in 2017.

Bottom line:
We are in the best position we have been in for some time and if sales demand continues or increases, we should see another positive year in 2017, although modest price increases are still most likely.

Lots of key factors to consider and there are many reasons why 2017 would be a good year to move on your real estate plans. Stay tuned for a future post on what may shape our market in 2017 and feel free to give us a call to discuss your own housing plans, 613-435-4692 as now is a great time to get a head start on a spring or summer sale.

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

For one of Ottawa’s best real estate blogs: http://blog.oasisrealtyottawa.com/
…or real estate facebook pages: https://www.facebook.com/oasisrealtyottawa/…or twitter: https://twitter.com/OasisrealtyOTT

 

Should other governments follow BC’s lead on first time buyer loans?

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.

Gord McCormick, Broker of Record
Dawn Davey, Broker
613-435-4692 oasisrealty@rogers.com
www.oasisrealtyottawa.com  @oasisrealtyOTT
www.facebook.com/oasisrealtyottawa/

Quality service at lower fees equals better value!