We are fortunate to live in Ottawa with so many solid and secure public service jobs. This will help us recover faster than other market centres across the country. We are not however going to be immune to this unprecedented situation. It seems as if what first looked like a matter of weeks is now looking like months of social distancing. This will of course impact local business, tourism, restaurants, and just about everyone. Our local economy is going to be affected and some businesses just won’t survive. The government will help others stay afloat until this situation is resolved. The bigger question I have is once we are released from our quarantine will we be going to restaurants, bars, flying on planes, and getting back to normal life? That is the hope of course but that may require a vaccine or cure.
The Real Estate Market
Ottawa real estate prices have been on an upward trajectory for years. We are in an extreme seller’s market. This past year was a straight line up, with over 20% in gains. That momentum was stopped in its tracks. Our market was at absolute historical low levels of inventory and peak prices. To use an analogy, if your home was a stock it would have been at an all-time peak. Unlike the stock market, home prices do not crash overnight. That is why we should own more real estate than stocks. Luckily for Ottawa when the needle moves I see it moving towards a more balanced real estate market, maybe still slightly in sellers territory. Since we were so deep into seller’s territory we have room to move and still be in a good market.
ACTIVITY IN THE MARKET
Where does the housing market go from here?
It is naive to think that our current hot streak will continue. The market is going to start levelling off. I see the first impact coming in the entry-level market. I think some investors will get out of this market (this is not a bad thing). This will open the door to first-time buyers to pick up a property without bidding against 10 other buyers. This will put some downward pressure on some of the ridiculous prices we were seeing in this segment early this year. Sellers are going to have to start adjusting their prices to match the current demand. I am already seeing that when I look at the hot sheet of daily sold properties. I am actually seeing some homes sell for less than their asking price in some cases.
There will be pent up demand when all this is all resolved. In China, sales were booming as soon as the ban was lifted as people were waiting on things to resume. It will be interesting to see what kind of supply of listings we have compared with the demand of buyers. I suspect it will be a more balanced equation than where we have been in the past few years.
Stay safe everyone.
An interesting read from a credible economist on what is to come.
March 2020 will be a month none of us will forget. The speed at which this virus has taken over has been astonishing. I was in the process of interviewing potential candidates to join our team early in the month. Two weeks later the majority of our clients put their real estate needs on hold. We have been working from home trying to homeschool our kids and keep some type of daily routine. It has been challenging to say the least!
The real estate market can almost be divided into the first two weeks of the month and the final two. Early in the month, the statistics reflected what was going to be another record-breaking month. The final two weeks cooled that and we barely ended up ahead of last year’s sales numbers. The full impact on sales will eventually be reflected in April’s numbers.
People that don’t have an urgent need to buy or sell are being asked to wait till this is all over. A few of our clients have bought a new home prior to COVID-19 and are in a position where they absolutely need to sell. Others sold their home just before this hit and need a place to live. This is the main reason why our industry was deemed an essential service.
Members of the Ottawa Real Estate Board sold 1,525 residential properties in March through the Board’s Multiple Listing Service® System, compared with 1,507 in March 2019, an increase of only 1.2 percent. March’s sales included 1,170 in the residential-property class, up 3.3 percent from a year ago, and 355 in the condominium-property category, a decrease of 5.1 percent from March 2019. The five-year average for March unit sales is 1,465.
“Our results show that the Ottawa real estate market seems to have withstood the pressure of a worldwide economic event in March, however in context with our market’s performance up to this point, we can see the underlying effect. Before the pandemic, monthly unit sales were increasing between 10-16% from 2019, while March’s sales were just on par with a year ago” The board President
The slowdown included a 75% drop in showing activity in the final week of March according to Showingtime software (this is the software we use to process showing). Of course, this is not surprising because everyone is being told to stay at home. Interestingly I have seen a surge in some of our online initiatives. Including our very popular 3D tours. Here is an example of one of our listings: https://chrisscott.ca/properties/active-listings/425-barrick-hill-road/ Some buyers remain active and I am hearing of some purchasing their homes virtually from tours like this.
“Once the Ontario State of Emergency began, our Members and Brokerages rightly began to make all adjustments necessary for the health and wellbeing of our clients and customers. We welcomed the government’s declaration of real estate as an essential service so that transactions in progress could be completed. However, it was not and is not business as usual for our Members. They are heeding government and public health authority warnings and advice and are being diligent in taking extra safety precautions. All this, while still doing their best to help their clients successfully conclude or close real estate transactions that were already in progress,” Board President Burgoyne acknowledges.
The lasting impacts of COVID-19 are yet to be seen. Ottawa is going to be in a better position than most markets to weather the coming economic downturn. Historically we were in the hottest seller’s market ever. This, of course, will change but I think because we were in such a strong market when the needle moves we will still have a fair and balanced market. We just won’t see some of the ridiculous prices and bidding wars that were prevalent early in 2020.
Nothing is more exciting than a house-hunting trip to find your next home. Whether you want a single, condo or town there are so many styles and varieties of homes to choose. We often don’t think about whether we want a newly-constructed home or a resale. We often just jump on the internet and start searching.
We would like to make your journey a little easier by giving you the pros and cons of a brand-new home or whether a resale is in your stars. Here are our Chris Scott Real Estate Team’s suggestions on how to choose the best home for you and your budget.
New Build
Pros
latest upgrades and building code compliance
some flexibility on design features and upgrades
tax rebates may be available
new homes warranty
Cons
price may not be negotiable – upgrades may cost you more
unless custom built – many new construction homes are cookie-cutter designs
infrastructure may not be in place (schools, parks, public transit)
the added cost for fencing, lawn or paved driveway
the move-in date may not be flexible or may have construction delays
Resale
Pros
more established neighbourhoods
infrastructure already in place
price is negotiable
older homes are often unique in design
flexible move-in date
many older homes are built to last
fencing, paved driveways and decks included in resale
Cons
may need to bring the house up to code for wiring, septic, etc.
may need renovation or upgrades to bathrooms and kitchen
sometimes less energy-efficient
Whether you buy a newly-constructed home or a resale, the choice is yours. You need to feel comfortable with your decision and what suits your lifestyle best. If you are not sure what choice to make for you or your family, our Chris Scott Real Estate Team can help you with any real estate questions you may have to help you make your best choice!
Your home is one of the biggest investments in your lifetime. Home staging will help you get a better return on your money. Most buyers are looking for a move-in ready home and home staging helps them visualize this instantly. Besides, it makes your home look like a model home without you having to lift a finger.
Let’s look at some of the facts from the experts regarding why home staging is so big right now and why so many sellers are opting for this.
the National Association of Realtors says for every $100 invested in staging your home, the potential return is $400. That is four times the return for your investment.
homes that are professionally staged spend 73% less time on the market (Real Estate Staging Association)
85% of staged homes sold 6-25% more than un-staged homes (homestagingresource.com)
68% of staged homes sold for at least 9% more than un-staged homes (homestagingresource.com)
Let’s look at the following scenario:
Imagine you have an unstaged home priced at $500,000 that has been sitting on the market for a few months. You start getting worried and decrease the selling price by 5% — or by $25K. Your home now sells for less and your house is a stale listing. Buyers think there maybe be a problem with the house as it has been sitting for a while. You get frustrated and then decide to go with a separate home staging company at more cost to you again.
When a house first goes on the market, this is the time when there is a lot of interest from buyers. Once that first wave of interest passes, time can be your enemy. We are experienced in what a home needs to sell.
Our Chris Scott Real Estate Team believes that:
Timing is extremely important
Most activity is when it is first listed
A listing has the greatest opportunity to sell when it is staged properly
We want you to have your home staged so that you are competitive with other staged homes on the market. Staging works and it has proven itself time and again. We want every client to have the best version of their home and we feel everyone deserves this service. We offer a professional home stager service to all our clients. If you have any questions on how home staging will sell your home, do not hesitate to contact our Chris Scott Real Estate Team. We will provide a free evaluation of your home and make suggestions on how we can stage your home and get it quickly on the market.
The market is B-A-N-A-N-A-S! Was trying to think of a more eloquent word but bananas seems to fit here. Here are three reasons why:
Prices in our residential-class properties are up 21%
Prices in condo class are also up 21%
Over 58% of homes are selling for above their asking price (feels like 100%)
It is a tough market right now for buyers. They (and their agents) have to go through the process usually a few times before they can secure their house. Sellers hold all the cards! However, many sellers are also buyers. This has added to the inventory issue. Many sellers do not want to sell until they buy. So round and round on the no inventory hamster wheel we go!
There are not enough new listings to satisfy the growing demand for Ottawa properties. Much of the demand is the entry-level $400,000- $550,000 market. About 40% of all sales are in this price range. I am seeing very competitive offer situations in that range. Many homeowners are listing very low and creating a frenzy on the offer date. This is partly to blame for the high over-asking sale prices. It is frustrating many buyers too. To have to keep going higher and higher to secure the deal is no fun!
Investors are quietly playing a role in the frenzy too. I am seeing lots of out of town buyers coming in and buying up properties. Again, mostly in the entry-level range. This week I have seen a bit more inventory coming to the market. I hope this is a trend that continues.
If you would like to see some sales in your neighbourhood, let us know and we can send you a report on your area. Every neighbourhood is very different.
We have talked quite a bit about inventory in the past few months or the lack thereof. Right now this is the Ottawa real estate market’s biggest challenge. There were only 1082 properties that came for sale in January 2020. That is about 50% less than the average. Then you look at the 780 sales in January 2020. This represents a very high absorption rate. This absorption is most prevalent in the $400,000 to $555,000 range, this represents over 40% of January 2020 transactions.
Buyers are getting increasingly frustrated. Some have put their searches on hold. I don’t recommend this. I do believe we will get more supply in the next year but I think price appreciation will continue. A balanced and fair market is still at a minimum a year or two down the road.
Ottawa’s market increases are still sustainable and reasonable when you consider our high average income. It is just a bit shocking to see how rapidly some of the price appreciation is happening in certain neighbourhoods. I think this appreciation is in some part due to the fact that Ottawa has been very much undervalued in years past. Not anymore! I think the new reality is here to stay for a while. Every neighbourhood and segment of the market is unique. If you want to know what is happening in your area please feel free to get in touch.
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.
Another year is almost in the books! This one has flown by. This year has been the most active housing market I have experienced. The numbers bear that out. In November new listings were being absorbed by buyers at a record-setting pace. Here is what our board president had to say:
“Our inventory is not having a chance to build as it is being absorbed as quickly as it comes on the market. That’s why there are so many sales every month even though the supply stock is low,”
If we compare November of this year to last year, the price difference is almost shocking! See the statistics in the chart. We are up 16.9% on the freehold side and 9.8% on the condo side of things. At the start of next month, I will be providing a very detailed annual market report that breaks down all the numbers.
There is a slight cause for concern with the recent announcement that Canada lost over 71,000 jobs in the last month. This represents the largest drop in employment over a one month period since the financial crisis. Ottawa is always sheltered from this unless it hits the public service. Something to keep an eye on for sure.
If you want to know what’s happening in your neighbourhood, please feel free to reach out.
It is a winter wonderland out there already. What the heck is going on! A snow day on Nov 12th is madness!! Some people may be wondering if the cold weather will put a chill in this hot real estate market. I am not sure that will be the case. The numbers from October reveal that there is some madness in that regard too!
Our market is summed up nicely by our board president:
“New listings are down, inventory remains scarce, and yet more homes changed hands this October than in the past decade and a half,” reports Dwight Delahunt, President of the Ottawa Real Estate Board. “It’s perplexing at first; however, when you consider the current breakneck transaction pace in the Ottawa resale market, often requiring homebuyers and sellers to make swift decisions, it makes sense.”
When I analyze the market it is clear to see we are firing on all cylinders. What I see is that for the first time you have all segments of the market including condos and freeholds beings extremely desirable to buyers. In years past it might have been the condo market that was hot or the last few years, it was more about the freehold market. Often times it could be different locations that were “hot”. This year it seems to be every segment in almost all locations. Especially West of downtown. The hottest locations are experiencing price increases of over 5% when compared to March and April of this year!! Many buyers back in the Spring were patient and that patience is long gone with buyers now realizing they have to pay a big premium (in some cases) to secure their home.
I get why our market is what it is. We have been undervalued for a long time. I have said this in my annual reports for years. Even now in relation to our average earnings and the extremely high quality of life in our city, I can still make that case. It is just not much of a secret anymore! If you want to know what’s happening in your neighbourhood let me know. We are always happy to be a real estate resource for you.
Every day I look through the hot sheet from the Ottawa Real Estate board. It is a list of all new properties to the market. One thing that almost every one of them has in common is that they were holding offers. This means the seller is waiting till a certain date and time to review offers. The idea is that they will have lots of showings between the list date and offer date. The hope, of course, being that the seller will have multiple offers to choose from. There are some buyers who do not want to wait until the offer date. That is where the term bully offer comes from.
The bully offer:
I prefer the term pre-emptive offer. Essentially the buyer makes an offer right away and before pre-determine offer presentation. The offer is usually at a premium price and often with no conditions. Example: House is listed for $400,000 and the buyer makes an offer for $450,000 on day 1. This would get the seller’s attention right?! The idea is to make the seller think twice about waiting until their pre-determined date.
A few other things to consider:
The Realtor is often in a tough position here as well. They have a form 244 signed with their clients explaining that there is no conveyance of offers until the specific date. If the Realtor then presents this offer it is in breach of the pre-signed paperwork. Further, other agents who showed the property or have scheduled showings on the property need to be kept in the loop on any change of directions. Our team has been on both ends of bully offers and there is a lot of things to navigate here for sure.
