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