The Ottawa Real Estate Board (OREB) results for November show another strong sales month, despite the early onset of wintry conditions. Unit sales and average home prices both approached double digit gains, compared to November 2018. The market shows no trends of flattening out, except for the usual seasonal fluctuations.
Key average price milestones reached this year:
The average detached home price has sold this year for $510,975, an increase of 8.4% or $39,693, breaching the $500K mark for the first time.
The average residential row townhome has sold for $408,905, an increase of 9.8% or $36,620, topping $400K.
The average residential semi-detached home has sold for $489,656 an increase of 9.5%. or $42,447
The average condo sold this year has topped $300,000, coming in with a 9.1% price increase to 303,817 which is up $25,459 from a year ago. Apartment condos lead the way with an average price of $324,459 up 5.7% while row units and stacked condos also showing similar $ price gains at $268,613 and $274,860 respectively.
Listing inventory continues to languish:
The number of new listings in November are pretty flat with a year ago, so while they are not getting any worse, they are not improving, either. This means our supply/demand imbalance should continue for the short term, at least-given the strong sales demand.
At the end of November, our residential listing inventory was 22.6% lower than last year at the same time and condo listing inventory was 43.9% lower.
About the only listing category that was higher was the number of rentals that are MLS® listed, which are up 53.9% vs 2018. Year to date rentals done via MLS® are basically flat vs last year, so that category is not seeing the same growth as the resale market.
City policy on short term rentals may put more inventory in the market:
Though there will no doubt be ongoing appeal action via OMB or other legal avenues, there could be a slight bump in available listing inventory and long term rental properties, from investors losing their ability to rent their (non resident occupied) properties via Airbnb or VRBO. Numbers are not readily available of how many housing units fall in this category but this could have help the condo and urban market inventory where most of the short term rental properties are located. Airbnb totalled some 4,600 listings in Ottawa over the last 12 months, so the number of investors involved might easily be 500-1,000 (or more) which would be welcome in the long term rental or resale markets. Stay tuned!
New home construction:
New home sales continue to flourish and with the upward trajectory in the market, many new home buyers feel they are kind of “doubling down”, in that both their current home and the one “on order” or “to be built” are appreciating in price, while they wait for the new home possession which typically is 8-12 months or more, down the road.
Cost of waiting makes buying even more expensive:
Strong markets like this make it tough on all buyers, particularly first time buyers and those that are “fence sitters”, who are considering a move but don’t really have a compelling reason to do so, until they find the “right” property. The upward price trajectory, however, makes the cost of waiting potentially significant. For example, even if current prices only increase by 6% over the next months (a Re/Max projection for Ottawa), the average prices overall could look something like this:
The average detached single home will jump to $541,633 and a further hike of $30,000+ over current prices.
The average two storey single detached home could top $600,000 next year, with a 6% hike from this years’ average price of $567,456.
The average townhome would jump to $433,439 up $25,534
The average condo would increase to $322,026 overall and the average apartment condo to $343,926, each up almost $20K.
This means more down payment needed to qualify for appropriate financing, more to generate 20%+ down payment for investment properties, higher land transfer and mortgage insurance costs and a longer period to pay off mortgages taken out against these purchases.
These also represent only “average” price increases and higher priced properties could easily be going for $50-$100K more in the immediately foreseeable future, especially, if the current inventory shortage continues and the market generates another 8-10% price rise.