With the summer coming to a close it will be interesting to see if our real estate market will continue its red hot pace. August brought some much-needed housing inventory. In fact, we had the most August listings since 2015. This is good news for buyers! It also led to a record-breaking month for sales.
Ottawa Realtors sold 2,017 residential properties in August through the MLS System, compared with 1,725 in August 2019, a year over year increase of 17 percent. August’s sales included 1,576 in the residential-property class, up 22 percent from a year ago, and 441 in the condominium-property category, an increase of 2 percent from August 2019. The five-year average for August unit sales is 1,668.
So far, the new listings coming to the market are easily absorbed by demand. If we have a few more months of this kind of inventory surge we may see some of this demand start to get satisfied. I am already seeing some listings with fewer offers and fewer showings. This is also due to some sellers deciding to price on the higher side of the market. Eventually, this additional inventory can help balance our market.
The most common question I am getting these days is what is causing such a spike in prices. The combination of record-low mortgage rates, migrating buyers cashing out in larger markets, and decreasing debt/equity thresholds are all playing a role. An interesting dynamic has emerged with people spending more time in their homes due to COVID-19 and starting to figure out that the space may not be meeting their requirements.
Saying goodbye to my childhood home was a bit more challenging than I thought. Afterall a house is just brick and mortar, right? I have been told memories are really what matter and you can take them with you. Over the course of the 45 years in that home, we certainly have some great memories to cherish. The day before the big move we had a very special dinner with just the original 6! No kids or spouses. It was a unique experience because it just doesn’t happen anymore. As we finished packing the rooms and drank wine we reminisced about some of our favorite memories in each room of the house. Lots of laughter recounting some of the best moments in each room. My sister getting stuck in the window as she was sneaking out was one of the best! My parents were enlightened to some of our shenanigans over the years. As an example when they would go away for the weekend we would get the pool up over 100 degrees. That way after partying downtown we would have a pool with the temperature of the hot tub to continue the party! One night we noticed the steam from the pool from our front yard, it looked like the house was on fire! Our home was always the gathering place for big events. Graduation parties, Hollyfield/Tyson fights, big Senator games, and Crosby’s golden goal come to mind. It served us well over the years. Every time I drive by there in the future I will smile and I am sure a few good memories will come to mind. It is good to know a nice family will be making memories of their own there. What an epic chapter in our lives. The end of an era!
When one chapter closes another one begins. This chapter will be all about family, Sunday dinners, and the grandkids spending more time with my parents. Also, hopefully, a bit more babysitting for us! Change is tough but sometimes necessary and we are all excited about what the future holds.
I know that my real estate team is not just selling or helping our clients purchase houses. It is much more than that. A home is a secure place where you live, laugh, learn, love, and create memories that will last a lifetime. Memories that our children will pass on to their kids. I am privileged to play a small role in this for our clients and will continually strive to provide the best experience possible. After all, home is where the heart is!
Prices are surging in Ottawa. Somewhat surprising given the current pandemic!! Employment levels are down by over 60,000 in Ottawa. So how is it that prices are going up? The biggest single factor is the shortage of listings. In July we were down 55% year over year. We are down in availability at a time where demand is up. That lead to a 19.4% gain in year over year prices. This is over a 2019 that people thought prices had peaked! Over 60% of homes were snatched up in bidding wars. That is up over 50% over last year. Essentially, if you want to buy this year you will be competing for it. This is great news for our seller clients but can be challenging for buyers. Homes in Ottawa are selling on average in 33 days.
What I am seeing on the ground is that Ottawa buyers are getting more comfortable paying 700k+ for their homes. As many of the people in this price point are also sellers. They are getting much more for their homes. Some townhouse sellers are now getting 500k+ and so the transition to an 800k “forever home” does not seem like as big of a stretch. Million-dollar listings and buyers are no big deal in Ottawa anymore. Our market is slowly starting to look closer to our neighbors down the 401. Right now buyers are looking for more space for home offices, bigger back yards, and all in all a better place to hunker down. Pools have been in high demand too. Interesting times for sure.
Are we in a bubble?
I wish I had a crystal ball and could see out into the future. It feels weird that prices are surging so much with the world where it is. Anyone else surprised to see the stock market doing so well? It is so hard to predict these things. All I can say is that the bubble question has been around since I started in real estate. Every year we would hear about prices coming down. Hard to see prices retreating in Ottawa without public service cuts. It is hard to see those cuts coming at a time like this. Only time will tell. For me, I believe that the next 6-9 months are still going to be very active. I have actually bet on the market a bit. Check out my recent blog post on buying my forever home during covid-19: https://chrisscott.ca/2020/08/07/buying-our-forever-home-during-covid-19-and-betting-on-the-market/
I love my current home. My wife and I love our neighbourhood and the neighbours on our street. We always thought we would be here long term. How is it then, that in a global pandemic, we impulsively purchased a new home. To be quite honest I am still not sure. It happened so fast 🙂 We were not even looking. My wife literally looked at 2 houses and we put offers on both of them. What really got us was the idea of having a pool, privacy, and main floor office. Not sure we would be moving if it wasn’t for Covid-19. Also, nice to have something positive to look forward amongst so much anxiety and uncertainty. Are other people having similar feelings? I have got calls from clients that said Covid-19 has them revisiting what they really want in their home. Pools have all of a sudden become more important!
This is what sold us:
Now we just have to wait till 2021 to move in!
Buying in Hot 2020 and Selling in Uncertain 2021
The catch with our purchase is that we cannot move till next year because of the seller’s plans. They are building a house and it was delayed. It will be the longest resale closing of my real estate career! The waiting game is going to be painful. The challenging part financially is that we have purchased in a really hot market and will be selling in an uncertain 2021. I am a pragmatic person. I know next year our market will not be as good as our current market. How could it be, we are in the hottest market in a generation. I do believe next year will still be a good market. Our current supply shortage and strong demand are enough to sustain a seller’s position for at least the next 6-8 months. I am betting on it with my own house. If I am wrong I have plugged in all my numbers very conservatively. Hope for the best and plan for the worst. If we end up somewhere in the middle I will be happy.
The Emotions of a Buyer
It has been a great exercise going through the buying process again. It has really reminded me of how exciting the process is for buyers and all the emotions they are going through. Anyone else have buyers remorse the day after their purchase?? I did! Thankfully it was a very fleeting emotion. Buying a home is stressful, exciting, and consumes much of a person’s thoughts in the moments leading up to purchase and throughout the process. I totally get that and will make sure our team’s services are always making the process as seamless as possible for our clients.
The first half of 2020 is one for the books! We are living in a time that will be talked about for generations to come. COVID has irrevocably changed how we go about our daily lives now and in the future. The long term impacts on our economy are yet to be fully understood. Interestingly the impact on the Ottawa housing market has been quite the opposite of what most people would have thought.
I have been a Realtor for almost 16 years now and I have never experienced a roller-coaster real estate market like we have seen this so far this year. It was very much a seller’s market in January and February. Things grinded to a halt for basically the second half of March. Then April hit and the pace started to pick up. Now that pace is a full sprint! The driving factor is the lack of available inventory. COVID has taken out a huge amount of homes that would have been listed. Buyers are slugging it out for very few homes. I was up against 30 other offers on a house this week! How the heck do you beat 30 other buyers. Over 56% of homes in June sold for above their asking price.
For the first time since COVID happened, we have had a normal week of inventory hit the market. I expect that trend to continue and hopefully take off some of the pressure buyers are feeling out there. We will be in a sellers market territory for the foreseeable future.
The bottom line is our local economy is really showing just how resilient we are to outside economic factors. I believe that Ottawa is the most stable real estate market in the world. Bolded that for effect. It may not even be close. We are so fortunate to have this stability in our local market. Some market centres like Edmonton, Fort McMurray, Cold Lake, and others have had major swings one way or the other. Ottawa has historically not had any major swings at all. Our prices even go up in a pandemic! Seriously though that is pretty crazy.
Our team is committed to helping our clients get their house ready for the market. It is important to help our seller clients receive as much out of the sale as possible. Call us if you have any questions. We are always happy to help.
What a strange year it has been so far. I hope everyone is doing well. With the economy starting to open up and the cases of new infections decreasing things are finally starting to head in the right direction. This might be welcome news for home buyers as they await new inventory from reluctant sellers. Many sellers have not wanted anyone coming through their home during the pandemic. In the weeks ahead we should see a spike in new listings. With the demand out there and supply shortage, it couldn’t come soon enough!
Sales in May were down 44% in Ottawa compared with the same month last year. The shortage of homes for sale in Ottawa did put upward pressure on prices. You have more buyers competing for fewer homes. Prices peaked up 11.2 over May of 2019.
The CMHC forecast for Canada house prices seemed bleak as it called for some declines across the country. Ottawa is one of the only markets that is still red hot. With interest rates now below 2% on a fixed rate the chances of this continuing are likely. Here is what our board President said about the current state of the Ottawa Real Estate market:
“with our region’s stable employment and a continuous influx of newcomers, homeowners can take comfort in the knowledge that owning a property in Ottawa and its surrounding areas is a solid investment for yourselves and future generations,”
CMHC insurance did release some new guidelines on their lending policies. This may impact some buyers and what they will be able to afford.
In a move hailed by CMHC as a method to “protect future home buyers and reduce risk”, they have announced the following changes to their underwriting criteria effective July 1, 2020. There are four main changes to CMHC’s lending policies with this announcement:
Reducing the maximum gross debt ratio (GDS) from 39 to 35.
Reducing the maximum total debt service ratio (TDS) from 44 to 42.
The minimum credit score increases from 600 to 680 for at least one borrower on the mortgage.
Non-traditional sources of down payment (i.e. borrowed from a line of credit or credit card) will not be treated as equity for insurance purposes.
The changes above apply to home buyers that are purchasing a home with less than 20% down payment where the default insurance is provided by CMHC. Based on recent previous mortgage changes, we expect that the July 1st deadline will mean those home buyers must have a firm purchase and sale agreement on a specific property and a fully committed mortgage approval by that date to be eligible under the “old” rules. This is unconfirmed at this time.
The combined increase of the GDS and TDS ratios represent a 9%-13% decrease in purchasing power for those with less than 20% down payment.
If you are curious about what is happening in your area please feel free to get in touch. We are always happy to be of service.
There is no status quo right now in any industry. In real estate, we are pivoting and providing lots of unique options to our Ottawa selling clients. In this case, our clients chose our exclusive option. This allowed us to actively market the property but not have it on the MLS. The seller only wanted very qualified buyers coming through the house. We were able to control that better with our exclusive option. At the time of listing, there were also two end units available on their street (Barrick Hill). Both were the same floor plan. We wanted to wait until they cleared MLS to list ours. We had a very throughout listing strategy.
Through our marketing efforts, we found a buyer who wanted to see it. That buyers agent had them view the 3d tour we had online. The buyer was able to comfortably walk through the home from the comfort of their own. When they came through for their in-person viewing they already knew it was the right house for them. We got a full price offer the next day. Our offer was significantly higher than the other two eventual sales on the street (average of 18k higher). We sold off-market for top dollar with very little hassle. Who you work with on the sale of your home matters!
If you are thinking about selling your Ottawa home, please feel free to contact us. We would love a chance to talk to you about our enhanced marketing services.
“Absolutely outstanding service! I was reluctant to trust realtors again after having a terrible experience on the sale of my first home with another agent. Chris and the team really went above and beyond on both the selling and buying side. I can not recommend them enough!” – Seller of Barrick Hill
These past 8 weeks have been challenging for everyone. Trying to home school, run a business, and keep everyone happy has been a challenge! My two boys have been pretty good but they are over it. My little guy Austin calls this a fire drill. He keeps asking “Daddy when is the fire drill going to be over”. Hopefully soon! In the meantime we are adapting to our new world as best we can. Our team is embracing the virtual experience and is offering the best in class services for sure.
In April sales were down over 56% from last year. Quite a drop considering how active our market was coming into early March. Amazing how quickly COVID-19 has turned everything upside down. We were selling homes in multiples about 60% of the time early in the year. Now that number fluctuates between 20-40%. I am noticing in the past few weeks it is creeping back up. Inventory is super tight still. Buyers are starting to get back to looking at homes and without new homes coming to market we might face an inventory crunch. I am optimistic that many new listings will be coming to the market in the upcoming few weeks. There are plenty of sellers that have been waiting to list. As things open up again I think their comfort level on listing their home will ease.
For comparison sake, Toronto sales are down over 67 percent with flat price increases. This resilience in Ottawa is due to the fact in families incomes are fairly secure and some buyers welcomed less competition and were willing to purchase virtually or with more caution. We were selling in multiple offers situations early in the year in say 60% of the time. Now we are in the 20-40% range.
VIRTUAL BUYERS:
This year there are going to be more and more buyers that will be purchasing homes without actually seeing it in person. We had a client this week make a 700k purchase through facetime! It seems risky but almost every new home sale is sold by looking at a floorplan. At least with the virtual experience, you can see the finished product. Albeit through video. Not everyone is going to be on board with buying without physically seeing it but it will be more important for sellers to offer the right tools for buyers so they can make an informed decision.
The proper marketing of your home has never been more important. We need to get your home exposed to as many people as possible online. We have added in services to make this happen. This additional exposure will help you maximize your sale price.
Virtual Staging:
We have been working on a new process to stage your home virtually. Our stager is phenomenal and will help you prepare each and every room in the house. It will involve a few calls, some pictures back and forth, and will end with a full detailed report for you to follow. It will essentially be a game plan for getting your house market-ready. This work will help you maximize the sale price of your home. Statistically speaking staged homes sell for at least 2% more than non staged homes.
This will give buyers the opportunity to experience a showing from the comfort of their home. Having this tour is paramount in today’s market. Some buyers are purchasing the home just based on this tour!
Floor Plans:
We will have a professional floorplan drawn up so buyers can see the dimensions of each room and the layout of the space. An integral part in the new virtual world.
Professional Pictures:
In the weeks ahead we will be taking extra pictures for buyers to look at. Our photographer is amazing and you can see her work by clicking on the link. She will also take precautions when photographing.
Video Walkthrough:
This will be done to take people through every aspect of the home. We are trying to give every buyer the opportunity to purchase your home without actually seeing it in person. We just started doing this. My partner launched a listing with this feature yesterday. Here is an example: https://quickpageapp.com/p/aku2ny6FBWfECMgfu?cid=dAWQJfWDgdiS4GrS7
Social Media Ads:
Embracing the virtual aspect of the market we will have ads running on Facebook and Instagram focusing on buyers in your area. https://www.facebook.com/ChrisScottTeam/videos/157686085597878/ We entice them with a short video of the 3d tour playing and they can click to take a walkthrough.
Electronic Signatures:
We are completing all our agreements via an e-signing program that is easy to use. Stephanie, our listing manager is still working full-time Mon-Fri 830-430. We have lots of support for all our clients. She will be getting all buyers to sign Covid-19 forms prior to any viewing. We are trying to do everything we can to mitigate risk for our clients while making it easy for buyers to get all the information they need on our listings.
The subject homes in this case study were almost identical. They are the exact same Red Oak model by Tartan. They are right across the street from each other. Upgrades were similar. The houses were essentially the same value.
Difference: $14,157
Why it matters who you work with!
It is tempting to save money on commissions, I get it. My sellers paid more to work with our team in this scenario. They also netted thousands of dollars more than their neighbor across the street. Our seller also received a more personalized service experience.
People always get caught up in how much they are paying and not necessarily the value they are receiving.
Top 3 Reasons We Got More
1) Staging: The house was professionally staged and ready for viewings. This service included multiple visits and staging rentals.
2) 3D Tour: We had a 3D tour available online that attracted our eventual buyer. They were able to walk through the property virtually before stepping foot inside. When they came for their first visit it was pretty much a 2nd showing.
3) Negotiating: We were able to get over $14,000 more than the house across the street. Both homes were almost identical. They were the exact same model and had similar upgrades. We had the disadvantage of them selling first at a lower price. We stayed very strong and got more than our asking price with no other offers on the table. How you might ask? I have been negotiating deals for over 15 years. I have seen it all. I am ready to be strong to protect your hard-earned home equity. The other home had their house negotiated from a call center in Toronto. Often times in life you get what you pay for. I have learned that time and time again with so many products and services. I now make my decisions on value.
Happy Client
My clients met with me pre-covid and we set up a listing plan for them. That plan, of course, changed quite a bit leading up to the listing date as covid restrictions were put in place. My clients could not wait to sell because they purchased a new home already. We pivoted and put a new plan in place that included the 3d tour, staging, and online marketing. The results were great! Our team was thrilled we were able to get such a favorable price for our longtime clients.
