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ANNUAL REAL ESTATE REPORT: OTTAWA 2020

Posted on: January 14th, 2020 by Chris Scott

OTTAWA REAL ESTATE REPORT

RECAP OF 2019

It was an incredible year of growth and price appreciation in the Ottawa real estate market. Prices were up in all categories. Year-end figures show the average freehold property sale price was $486,590 in 2019. This represents an 8.9% increase over the previous year. In the condo market prices soared over 9%! It would have been hard to predict these numbers before the start of the year.

These incredible gains are being fueled by the lack of supply and strong demand for Ottawa real estate. As the year went on the supply tightened and this put upward pressure on prices. The prices really started to push up in the 2nd half of the year. In some neighbourhoods in Nepean and Ottawa west, I have seen a price appreciation of 6% between sales in March and sales in September. This is because supply tightened as the year went on and in addition, more buyers entered the marketplace.

In 2019 Ottawa’s population grew to over 1 million people. Our city is maturing into a world-class capital before our very eyes! The new LRT line was unveiled and many new projects are on the way. Legacy projects like the civic hospital relocation, LRT expansion, and Lebreton flats redevelopment are on the horizon. This combined with the insatiable demand for Ottawa real estate should keep our construction market strong for the foreseeable future.

Average sales prices are for 2019 based on MLS sales.

Combined is for all property classes. Arrows are gains from 2018.

OTTAWA REAL ESTATE REPORT

FORECAST 2020 

The Ottawa real estate market is showing no signs of weakness. Supply issues will persist in 2020. I don’t expect the inventory will recover in the near future. The absorption rate of our current inventory is like nothing we have seen before!   Prices are expected to continue to grow over the upcoming few years. The demand for our real estate is at an all-time peak. This trend will continue to put upward pressure on prices throughout the next few years. Although prices are going up relative to our income we are actually still in a sustainable position. Prices in Ottawa, when compared with our earnings, are still affordable.

 

Below you can see a table of real estate prices in Ottawa since 1981. The only declining years are in red. The table illustrates just how stable our market is. The only declines were consecutive (94-96) and houses lost less than 3% in each of those years. If you were at a craps table and saw this much black on the board how much money would you be prepared to invest. If you are a long term investor it would be pretty hard to find a scenario where you could lose.

Based on OREB RES & CON MLS Sales | 2020 Prediction

OTTAWA REAL ESTATE REPORT

KEY INDICATORS

OTTAWA: RELATIVELY HIGHER EARNINGS

Ottawa’s solid public sector is a great foundational piece of our economy.  This represents 20% of the workforce in Ottawa. These jobs are high earnings with very good security. When I think of my own network of friends, almost every couple has at least one person working for the government. In some cases, both spouses work there and this creates some very high household income. This past year saw a 6.9% increase in our weekly average income. We have not seen that kind of income growth in Ottawa since 2001. When we see our earnings higher than our neighbours down the 401, it surprises some people. Of course with the financial sector in Toronto, there is more wealth and one-percenters. Ottawa just does a better job with the distribution of wealth.

 

SUPPLY TRENDS LOWER FOR FREEHOLDS & CONDO

Supply is the single biggest issue in our market. It is so interesting to see where we are from an inventory perspective when compared to the last 15 years.  We are at the lowest point in both the condo and the freehold segment of the market. Look at the condos available in 2015! Over 6000 on the market. This is the heartbeat of the market. When we see inventory this low,  prices can only go in one direction! The little secret I have been telling people about Ottawa’s bargain real estate prices is out! Our market is on fuego.

 

STEADY EMPLOYMENT GROWTH EXPECTED

The local economy and job market in Ottawa are solid. Steady job growth is expected to continue over the next few years. It is good to see that full-time job growth is up 5%. This is important because people that occupy full-time jobs are much more likely to be approved financially to purchase real estate.  Our capital city also is one of the hottest and most diverse tech hubs in North America. Overall the health of our local economy couldn’t be better.

If you are curious about your home’s worth please fill in this form for a no-obligation market assessment.

 

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