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.
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.
