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.
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.