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 oasisrealty@rogers.com www.oasisrealtyottawa.com
• 3572 sqft , 4 bath , 1 half bath , 4 bdrm 2 storey – FOR SALE CAD $1,299,999 . Builder model home selloff MLS® 1323371
in Cardinal Creek Village, Ottawa
Remember how model homes can take your breath away? ….here is a chance to own a real beauty and at a bargain price in today’s market! These homes only come on the market every few years and it is also rare that they are made widely available to the public via a realtor.ca/MLS listing. This large family home has all the bells and whistles and is worthy of a look by anyone looking for 3,500 sq ft plus homes. Too many upgrades to mention here but here are just: upgraded hardwood and ceramic tile throughout the home, 3 bathrooms on the 2nd floor, including 2 ensuites (a very rare feature!)
Other models also available but ask your agent to book you a visit to see what is available, during builder sales centre hours M-W 12-7, Sat/Sun 12-5, closed Thursday and Friday.
Exterior front picture is current and the inside photos were taken previously.
Full new home warranty and no one else has lived in the home. Close to future Trim Rd LRT and right across the street from a lovely park!
Call us directly at 613-371-9691 for more information or to book a showing
Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
save big on real estate sales costs….most residential home listings only 3-3.5% and some as low as 2%! (not intended to solicit clients of other brokerages)
new listings surged in March but buyer demand met the challenge with huge unit sales increases
In a more normal market a 30-40% increase in new listings would be cause for concern. But not the case with our wild and crazy market that pumped out unit sales increases of 47% for residential properties and 65% for condos, during March. This obliterated the new listing surge and pushed already soaring prices in to the stratosphere: The average residential property sold for $758,802 during March up 35% vs last year and the average condo sold for $437,046, up 18%.
Price-low-to-sell-high: Unfortunately, 80% of listings sold at above listing price during the month (vs 60% a year ago) We say, “unfortunately” because this reflects the fact that the market has proven that the lowest listing price generates the greatest buyer interest and number of offers, therefore yielding a higher sales price.
Time and time again, we note listings where a cursory look at recent sales for reference properties show a pattern of selling in the high $500’s, (for example) yet the new listing comes out at $450 or $499K…what’s the point? Why not list at $550 or $575K? …because if one does that, the market has shown that you don’t get as many showings or offers, nor a healthily higher than list price result. So while it is very unkind to buyers, (who will always believe they have a chance) if it is in the sellers’ best interest, then that is what many listing agents feel compelled to do. There is a strong sentiment among Realtors, however, that properties can still be properly priced and we have seen instances of online “price shaming” where some Realtors call out another for an obviously way underpriced listing.
Sellers: do your best to temper expectations Side note: just did a quick survey of 500+ residential sales over the last 7 days. The selling price to listing price was a healthy 111.3% and properties sold almost $60K higher than the list price…. but how much of this $60K overage is accounted for by the underpricing practice noted above?
There is a bit of a trap here for sellers: if you believe you have priced your property for what you really hope to achieve and is reasonable then don’t expect that you will still get the $50-$75K-$100K over list price result (or more!) that you read about daily. Not everything is selling $100K or $200K or $400K above list. Getting a full list price result, with a strong buyer and favourable conditions (usually, none at all) should still be considered a fully satisfactory result. Anything more is a bonus and expectations should not be that every listing results in a lottery win. If something sells for way too much over list, there is the potential for appraisal issues or buyer financing issues.
The listing cupboard is bare…especially for residential property: At the end of March, our residential listing inventory was only 868 properties, down 46.7% from 2020, which was already down 37.9% vs 2019. Current on hand inventory is barely enough to satisfy two weeks of expected sales! In a “balanced” (equal supply and demand) we expect to have at least 2 to 3 months of expected sales on hand. So no surprise the average days-on-market (DOM) to sell is down to 10 days for residential properties and 14 days for condos. It would be much lower than this but for holding back offer dates.
Wildest Q1 ever? Prices for the quarter were record setting at an average of $729,897 for residential, up 32% year to date and the average condo sold for $415,054, an increase of 17% over the same quarter a year ago.
Unit sales were up by 33.5% for residential properties and 40.5% for condos. Rentals by members of the Board also soared by 44% during the quarter.
Conditions? …what conditions? A scary attribute of this market is the almost total lack of buyer conditions. Though the Board does not track this, my back of the envelope guess-stimate, concludes that approximately 60 to 70% of deals are being done with no buyer conditions. A lot of risk being taken on financing approval, appraisal, lack of inspections or heaven forbid, the sale of a buyer’s existing home. In most cases, this risk is on the buyer and their agent…but what happens if the buyer doesn’t get financing? Doesn’t sell their existing home for what is anticipated?
A “semi-senior” moment? ….how about an almost $300K hike in 2 years! I am sure that many must be shaking their heads and asking themselves: “how did this type of property get to that price level? Have I been asleep at the switch? If one compares the average residential sale price in March 2021 of $758,802 to only two years ago when March 2019 yielded an average selling price of $480,589, the difference is a staggering gain of $278,213 or 57.8%
Where do we go from here? Buckle up….it looks like more of the same in the weeks ahead, as we start our peak 10-12 weeks of real estate activity for the year. We’ll be keeping an eye on listing inventory and reporting on it regularly, as this statistic, combined with sales absorption, are always key indicators of market direction.
Be realistic and take what the market can provide: Buyers can have many frustrations in this market, but also must temper their own expectations. If your financial plan says you don’t want to spend more than $500K, then don’t rush out to see every $499K listing, if it is clear it may sell for $600. Your agent should be able to help with this and sometimes even a call to the listing agent, may give an idea of what the seller expectation is for a selling price. If they want a minimum $600K and your top point possible is $525K…why bother frustrating yourself?
As mentioned earlier, sellers can also moderate their own expectations. Obtaining a winning offer well above list, is best treated as a nice surprise, rather than an expected or guaranteed result, as there can well be differences in expectations and results. The market (buyers collectively) will decide what it is willing to pay for a property/product and seller expectations have very little to do with it.
Gord McCormick, Broker of Record Oasis Realty Brokerage Ottawa 613-371-9691 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 oasisrealty@rogers.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
Condos: 67.9%
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.
residential average sale price jumps 22%…how long can this continue?
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.
Taxes:
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 oasisrealty@rogers.com
• 2700 sqft, 3 bath, 4 bdrm1 1/2 story – FOR SALE CAD875,000 . Monarch "Brookside" bungaloft
in Stonebridge, Ottawa
SNEAK PEEK! EXCLUSIVE (NON-MLS LISTING) In the heart of Stonebridge (phase 2) on a quiet crescent, awaits this venerable “Brookside” (aka Mahogany) bungalow with loft. This upscale neighbourhood has been a coveted location in suburban Ottawa since its inception. Close to the golf course, river and Stonebridge Trail. This bright, spacious home boasts over 2700 sq ft of above ground living space per builder plans (and MPAC) and a full basement which could be developed for yet even more living space. (multi-generational use, nanny suite, work out studio, home business) The home features 2 bedrooms plus den and 2 full baths on the expansive main floor plus soaring cathedral style ceilings and large windows for optimal natural light. (southwest exposure in rear, means one enjoys natural light year round) An open concept/ kitchen, eat in area, living room and dining room make for the utmost in family or other social gatherings or entertaining. A convenient main floor laundry right beside the bedroom areas, complete the main floor amenities. In the apartment size loft above, there are two more spacious bedrooms, as well as an open den or TV area and a 3rd full bathroom. The large lot home is fully fenced in rear, where there is also a low maintenance deck, shed and inground sprinkler system This lightly lived in and extremely well maintained home is move in ready and the main floor was professionally painted in early 2020. Surprisingly reasonable utility costs. Some key additional features include: covered front porch, alarm system, central vac and central air, gas cooktop, oven and dryer, quality Laureyson kitchen cabinetry with additional pantry/cupboard, 2 huge linen closets (one on main and one in loft), gas BBQ hookup, convenient gas fireplace on main floor, quality hardwood and ceramic tile, cement pad and electrical hookup for hot tub, R-60 attic/ceiling insulation, basement rough in for future bath,
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
This topper on a For Sale sign may indicate an Exclusive listing
What is an “exclusive” listing anyway?
An “exclusive” listing is one which is not listed on MLS® but is being marketed by a single Realtor, who has a signed listing agreement from a seller, allowing/directing them to market the property. (by law, Realtors must have written instruction from a seller to market their property) In balanced markets or buyers markets, it is rarely used, as one of the many strengths of the MLS® system is to generate the widest possible exposure and this it does via an MLS® listing on the realtor.ca site and affiliated real estate websites in the realtor.ca ecosystem or network. By employing the “exclusive” listing, the listing sales person and brokerage are not posting the property on realtor.ca and instead are relying on only their own marketing efforts to find suitable buyers for the property. It has historically meant that other Realtors are not providing buyers for the property, so in essence, that listing is proprietary or exclusive to the listing agent and brokerage.
While there are some circumstances where the exclusive listing makes sense, it is impossible for a single agent or brokerage to generate the same interest or number of buyer prospects as can be generated by the other 3,000 sales people in our Board and the ubiquitous online power of realtor.ca and its affiliates.
So why are we seeing more exclusive listings in our current market? Our listing starved market has spawned the ever increasing use of holding back offers and bidding wars, due to the imbalance of supply and demand. This means that properties are selling very quickly and there is also a relatively limited level of listings available for real estate professionals to represent.
This brings a couple of challenges for Realtors who typically “list to exist”: The shelf life and personal marketing/advertising value of each listing to the Realtor is greatly diminished. It does not allow much time to be able to leverage that listing to gain ancillary prospects, who contact the listing agent and even if they don’t buy that particular property, could end up buying another or listing their current property with that Realtor. The exclusive or non MLS® listing, gives the listing agent the opportunity to leverage that property and try to gain a buyer to “double end” the sale or generate additional buyer or seller prospects. With high demand and use of social media and other advertising/market campaigns, the listing agent can generate additional footsteps or buyer traffic to their own “store” (so to speak)
Secondly, with many properties selling in only a few days, it is important to get as many people as possible exposed to the listed property prior to the offer date. The “exclusive” listing is most commonly used in this market, simply as a “pre-marketing” campaign and this is one sees so many of those “Coming Soon” sign toppers on For Sale signs. Listing agents publish the listing a week or two (sometimes more) ahead of the anticipated MLS®/realtor.ca launch date on their own websites and other marketing channels, including a large variety of online realtor groups that act as a portal for such properties. Savvy buyer agents stay on top of these on a daily basis.
Why exclusive is not really exclusive these days!
this pre-marketing of the non-MLS® listing is done under the contracted agreement called an “Exclusive” (as opposed to an MLS® ) listing but will in most cases contain provision for a payment to a co-operating brokerage and salesperson who brings a buyer to the property during the pre-marketing period. So while the type of listing falls in the “exclusive” category, it does not really preclude other Realtors from participating and bringing their buyer to the property. This can vary by listing, however, so buyers should have their buyer representatives contact the listing agent when they see a For Sale sign that shows the words “Exclusive Listing” &/or “Coming Soon” Note: Buyers please try to stop and get the address and name of the listing agent on these signs. We frequently see on our Realtor groups, postings that say something like: “my buyer saw a coming soon sign on Smyth Rd., does anyone know who is listing that property?
“The secret or off market listings” spiel: Creative buyer representatives are often spinning their services as being unique in having access to listings “not yet on the market” and use this as a ploy to generate buyer (and seller) leads. In a market where we have a dire shortage of listing inventory, it is understandable that some buyers will succumb to this type of mantra but most will recognize it is simply a slick sales pitch.
Buyers should always consider Exclusive listings, sellers not so much: A buyer should definitely go and see any property that meets their requirements (if allowed) but should be careful not to sign any representation agreement that binds them to that particular listing agent. Some agents may ask you to sign a “Buyer Representation Agreement” if you want to see this special property to which “only their buyers have access”.
Sellers should rarely consider accepting an offer via an exclusive listing unless it totally blows their minds. Why? Because until you have exposed the property to the complete market via an MLS®/realtor.ca listing, then you don’t really know what the true market value is and that seller could well be leaving “money on the table”. Granted there could be situations that warrant an exclusive listing and sale and whatever a seller and their listing agent agree is fair ball. However, a seller should be 100% sure they are getting full market value and not simply a quicker sale, double-ended sale or are being used to generate more clients for their listing agent.
Does a listing agent advertise their listings or vice versa?
A good way to tell if a Realtor advertises their listings or uses their listings to advertise themselves, is to look at previous or current listings and marketing materials and see whether the property or the listing agent is most prominent. In many cases, it is clear that the listing agent accomplishments, photo, logo, tag line etc. are more enhanced than the particular property being marketed. Does the listing agent leave out key information like address or selling price or interior photos? This can be a key clue, as it means the ad is intended to generate enquiries not simply sell the property.
Our approach: We like using the Exclusive listing and “Coming Soon” marketing as a pre-announcement (assuming our seller is in agreement) but only a relatively short time ahead of the MLS® launch. (perhaps a week ahead) During that pre-announcement period we can then advertise the property via our own channels and generate interest but we typically do not provide access to the property to any buyers during this time. Making the property available for showings with the MLS®/realtor.ca posting, is to us the most sensible way to provide equal access to all buyers and generate the maximum marketing opportunity for our sellers and thus generate the best market value possible. While it is nice if we generate additional prospects, it is a totally secondary issue, though we would not say this is true of all Realtors and we believe too many are trying to manipulate sellers for their own ancillary purposes by leveraging the listing and the exclusive listing process in a way that is not always in the best interest of the seller.
So sellers should be a little leery of the ulterior motives of a prospective listing agent pitching the Exclusive listing and buyers should likewise be very careful about signing up to see the exclusive listing, private listing, pocket listing or off market listing being touted by some agents.
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.
Spring outlook:
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.
