The Ottawa housing market has been extremely active over the past 6-9 months. It has been quite amazing to observe. New regulations and rising interest rates have some homeowners wondering if we have seen the last of these price gains. Here is a market minute update:
Our local economy is strong and consumer confidence is high. I really see no indications that this real estate market will cool anytime soon. Especially when I look at the most basic economic concept of supply and demand. Right now the supply is very limited in Ottawa and the demand is strong. We have only 6 weeks of inventory available right now in many neighbourhoods. This indicates a strong sellers market. We haven’t even hit the Spring market yet! If you are curious to whats happening in your neighbourhood feel free to get in touch.
This year our real estate market took everyone by surprise. At the beginning of the year, most economists were predicting a sluggish market with little or no price gains. The reality is that it was an incredibly strong year for real estate in Ottawa with solid price gains. This was fuelled by a lack of inventory in most neighbourhoods and segments of the market. The most significant change I found this year is that almost all styles of homes in various price ranges were extremely active. I had buyers looking for luxury homes over $1M and first-timers looking in the suburbs. In both cases, and everything in between, we were faced with lack of inventory and multiple offers. In some instances, we were competing against 12-14 other offers. It made buying a house more challenging for sure. Here is a statistical look and recap of the Ottawa market in 2017.
* All data is from Ottawa MLS statistics
** CDOM: Consecutive days on market
*** Percentage change is from 2016 stats
IMMIGRATION
Under the Liberal government, immigration has increased to over 300,000 annually. Many are settled into smaller cities but eventually make their way to the larger urban centres. Since Ottawa is the number 1 place to live in Canada, it is always a popular destination. This graph illustrates the future population growth in Ottawa.
POPULATION VS EMPLOYMENT
DEBT
The biggest concern I have right now is the mountain of debt that Canadians are carrying. We have more debt per capita than any other developed nation. This is something we will have to monitor moving forward.
FOREIGN BUYERS?
Contrary to what some people believe, Ottawa’s prices have not been rising due to foreign buyers. Not yet anyway. Right now foreign buyers own less than 0.7% of Ottawa condos and this is the same percentage as in 2014 (according to CMHC). In Vancouver, this is as high as 7.5%.
What I am seeing is some families relocating to Ottawa from Toronto. Basically cashing out in T.O. and moving down the 401. They are attracted to Ottawa because of its relative affordability, awesome lifestyle, and its location that is close to both Montreal and Toronto. As other major markets get too expensive we may start seeing more foreign buyers choose Ottawa. We are like the Switzerland of real estate.
SUPPLY/ DEMAND
Prices are usually determined by the most basic economic principle of supply and demand. This past year inventory was tight and demand was solid. I have many buyers that should have been in the market in 17′ but could not find a place because of tight supply and multiple bids. They along with many other buyers will now seek to find accommodation in 2018. I think our tight supply will continue into the new year. I think we are in for another competitive market in early 2018.
UNEMPLOYMENT
Unemployment is always one of biggest indicators when it comes to real estate prices. In Ottawa, we are fortunate to have a stable workforce anchored by the public service. Income levels support our current real estate prices and would still be able to accommodate new price gains. Essentially affordability is good. Especially compared to other markets like Vancouver or Toronto.
OTTAWA REQUIRED INCOME VS ACTUAL INCOME
MORTGAGE RATES
I sat in on a presentation by CIBC chief economist Benjamin Tal. He was asked if rates were going to rapidly increase in the upcoming few years. His response was that we won’t ever see very high rates again. We have different mechanisms and a central policy that we did not have in the 80’s/90’s when rates for homes are similar to what we are paying on credit cards.
MORTGAGE RULES: NEW STRESS TEST
The new mortgage rules will affect affordability for buyers. Insured mortgages will now need to be stress tested at the higher bank qualifying rate. This will reduce the average buyer’s purchasing power by about 20%. I am one of the few Realtors who actually agrees with this policy. We need to have buyers that can withstand any future increases in the mortgage rates. I think it is prudent and will help ensure that home buyers are not taking on debt that they can’t afford in the future. This protection will only help stabilize our market in the future.
OTTAWA CMA, MLS ® PRICE
MY PREDICTIONS FOR 2018
This time of year is usually pretty slow. However, I am off to present an offer for one of my clients in a snowstorm. We will be competing against 6-8 others. Basically what I am getting at is the market still has no inventory in many segments. I expect this trend to continue right through the Spring market. It will put upward pressure on prices again. I had some clients purchase a home in multiple bids in Hintonburg earlier this year. They were concerned that they paid too much. Buyers remorse is inevitable when you go way over asking price. This week the exact same unit with fewer upgrades came for sale and sold for 20k more than what my clients paid just 3 months ago. It tells me that some buyers in these areas are getting desperate to find accommodations. Once again we could be embarking on another very active and robust market in 2018. With the higher prices in the central locations, this will also help condo sales. Many buyers are being priced out of the freehold market and are turning back to condos as a viable option. For me, the wildcards in the market are the new mortgage rules and how Ottawa can absorb them. I think we can but it will make it harder for buyers in the higher price points. My gut tells me that there will be negative news from Toronto and Vancouver this year on the average price front. There are so many rules and regulations now for their markets to continue their torrent pace. How does this national coverage (if it happens) affect the consumer confidence here. Again, this is just my personal opinion here. If you are curious about what’s happening in your neighbourhood feel free to get in touch. We are always happy to provide you with sales data in and around your home.
PERCENTAGE INCREASE OF OTTAWA HOUSING PRICES
* Based on RES & CON MLS Sales
If you are curious about your homes worth please fill in this form for a no-obligation market assessment.
The Ottawa real estate market is still pretty hot, especially considering the time of year. Many Ottawa home buyers are looking to purchase before the new mortgage rules are implemented in January. Prices are up again over last year. Our average price for a residential-class property was up 3.2% over last November, sitting at $418,354. It is the number of houses sold that is impressive. In the residential-class property segment, there were 945 units sold which is an increase of 24% over last November. In the condo market, 294 units sold which is an increase of 27.8%. With a combined total of 1239 units sold in November and an overall increase of 24.9%. The prices may not have increased much from last year’s November but the number of units sold shows how active the Ottawa real estate still is.
As always feel free to reach out if you are curious to whats happening in your neighbourhood. I am always happy to help.
The Ottawa housing market results are in and the numbers for the average sale prices are up again month over month. Our average price for a residential-class property was up 8.6% over last October, sitting at $425,256. The condos are up 6.9% sitting at $269,604.
Units sold cooled a little in the condo market last month as for the first time in awhile they dropped well below the double-digit mark. 261 Condo units were sold last month compared to 255 in October 2016.
All in all, this has been another very active month for Ottawa real estate Look at the increases in the home prices. Really surprising to see such big numbers over last year. Nobody predicted this. There is some concern that the new mortgage rules will cool that early in 2018. I am not so sure it will have a big impact on Ottawa. For the most part Ottawa, home buyers are more conservative than say Vancouver or Toronto buyers when it comes to how much of their income they put towards real estate. Buyers will end up affording about 20% less in purchase price with the new rules. It will force people to stay within their comfort zone in terms of what they purchase. Might slow things slightly short term but in the long run, it will ensure that we continue to have a healthy balanced real estate market in Ottawa.
The Ottawa housing market results are in and the numbers for the average sale prices are up again month over month. Our average price for a residential-class property was up 8.2% over last September, sitting at $416,464. The condos are up 3.9% sitting at $261,548.
The Ottawa condo market was busy again. Units sold are still in the double digits compared to last year at this time. 311 Condo units were sold last month compared to 269 in September 2016. The major strength in the condo market is still the number of units being sold.
This fall season continues to be very active for Ottawa buyers and sellers. There has been a slight slow down in units sold -1.6% for the residential-class. That coupled with the fact that demand is strong as let to a very active real estate market here in Ottawa. If you are curious to know whats happening in your neighbourhood please feel free to get in touch.
Earlier this week we were featured in the Ottawa Citizen. Check out the article here: Ottawa Citizen Article
There have been some recent cases of buyers defaulting on their home purchases long after all the conditions have been met. This is still extremely rare in Ottawa but lawyers are seeing more of it.
This can be attributed to the markets in some major cities cooling off in-between when a buyer bought and when they close on the property. Basically, they buy in the hot early Spring market and by the time they are supposed to close on the property in August they paid well over market value by the time their closing date comes around a few months later. If this happens what can you do?
DEPOSIT: Buyers would surely lose their deposit. However, these funds are held in a trust account and cannot be released without an agreement between buyer and seller or a court order. Almost always the buyer will lose this deposit should they decide not to close. The challenge in Ottawa is that the deposits have been historically low compared with other cities.
LEGAL OBLIGATION: First off, this is one of the reasons I (and my assistant) are such sticklers for paperwork. We don’t want to give the buyer any chance to get out of the deal on small technicalities. We make sure all aspects of the legal requirements of any offer are met. Buyers do have a legal obligation to close on the property.
LEGAL COUNSEL: Should you find yourself in this precarious position my advice is to seek legal advice immediately. In some cases the lawyers can figure out a settlement that works for all parties and the house is put back on the market. If this is not the case then you would put the house back on the market after the buyers breach the agreement and you pursue damages in court.
LIKELY OUTCOME: There has been some precedent setting cases in Canada that a judge would rely on in their decision. Based on these cases it would be reasonable to assume the judge would rule in favour of the seller. A likely compensation being some of the extra moving costs, carrying costs, legal fees, and also potentially the difference in sale price if the seller received less money when they went back to the market. Quick example for you. In one case a buyer walked away from a 1.26 M purchase in Vancouver. The seller later sold to another buyer for $350,000 less. The judged ruled the original buyer who walked from their deal would be responsible to make up the difference. In short, it will cost the buyer if they walk away from their contractual obligations.
The Fall season is almost upon us. The kids are getting settled into school and everyone is getting back into a routine. Our little man Aiden just had his first day of school. It was pretty hard seeing him board his school bus for the first time! Kids grow up quick.
The Ottawa housing market results are in and the numbers for August are very positive. Our average price for a residential class property was up 7.6% over last August. We are sitting at $420,355. We are up over 7% YTD. Incredible numbers really considering most economists predicted the opposite.
The Ottawa condo market was busy. The prices were down slightly by less than half a percent. The average price of an Ottawa condo was $270,768. Where I see strength is in the units sold. We are up 22% over last years numbers. This has really been a nice turnaround for condos this year.
This fall season will continue to be very active for Ottawa buyers and sellers. There are still many buyers in the marketplace who were unable to secure their home in the Spring/Summer due to increased competition and tight supply. I expect this trend to continue for at least the next 90 days. If you have any questions on the market please let me know.
I hope everyone is having a great summer so far. Our local housing market continues to impress. In July the market was once again well ahead of where we were this time last year. Let’s look at the numbers.
These are the average numbers. There are some areas that are experiencing double digit increases over the same period last year. Anything West of downtown to Carlingwood would be in this category. Buyers want to be central and are willing to pay a hefty price to get there. Take Westboro/Carlingwood areas as an example. The average price here for a single is $758,000 that is up 11.5% from a year earlier.
Another reason for the strength in our market is that condo market is making a comeback. Much of the inventory that has been stale the last few years is being sold off. This has really helped to strengthen the market as a whole. Many condo owners (myself included) have rented their condos in the past few years waiting for better selling conditions. The time might be right to list for those condo investors. The condo market sold 332 units in July 2017 which is an increase or 19.4% compared to last years July.
Inventory continues to be an issue in some locations-especially in the central areas. The amount of new listings coming to market is lower than the 5-year average. Buyers are still patiently waiting for properties to come available. We are seeing a more active summer because many buyers were unable to secure their home in the Spring.
Interest Ratescould be a factor moving forward. As our economy strengthens it is natural that our key interest rate will rise. After many years of steady rates, we have finally seen a rise in the Bank of Canada rate. It recently increased by a 1/4 of a percent. Lenders have since followed suit. This will add about $12 more per month on average for every 100k of a mortgage. It will affect affordability but not enough to cool the Ottawa housing market. Something to keep our eye on. Ottawa is such a spread out city. There are different market trends happening in each micro market of the city. If you are curious to whats happening your neighbourhood let me know. I would be happy to provide you with a list of Ottawa homes that have recently sold around you.
The real estate market in Ottawa is often a very competitive place to purchase real estate. When a house is listed that shows well and is priced aggressively it will often attract more than one buyer. This creates a multiple bid situation. I have been in this situation too many times to count. Twice in the last week! In many of the cases, my clients are the ones who end up securing the house. I want to share with you a few tips that help make this happen.
Firstly, I think getting the right Realtor® working for you will be the most important step. Someone who can be a guide through this complicated process. A thorough review of the market is also very important. Often times multiple bids are created because a house is under-valued as compared with other listings that have sold in the area. This means that even though a buyer might pay more than list price for a home they are not necessarily paying over market value.
Price is often the most important factor in an offer, but not always. For most people, there is a human element in selling their house. I like to present my offers directly to the seller in multiple bids. Basically, tell them how wonderful my clients are-which is usually true! I have had sellers more than once choose my clients’ offer that was less money. One time over $3000 less!
Conditions also play a factor. Having too many conditions or long timelines can make an offer less attractive. In some cases, If the house is perfect then I suggest a pre-offer inspection. This way we can put forward a firm offer when the bid time comes. This will strengthen the offer considerably.
Multiple bids will always be a part of the home buying process. You might win some or lose some. Just remember things always have a way of working out in the end. If it is meant to be it will be!
Ottawa’s market has been thriving for the first half of 2017. Month over month we are seeing an increase in units sold and average sale prices increasing from last year. Compared to last year at this time, Ottawa homes sales units in both residential and condos property classes are up 13.5%. The average residential sale price for June 2017 was $434,502 up 8.8% from last year’s June and the average condo sale price for June 2017 was $289,950 up 9.4% over last year’s June. The number of Condo units sold per month continues to stay strong with an increase of 23.3% compared to last year’s June. This is the 5th year in a row the number of units sold both residential and condo properties have increased in June. The demand is still high right now in certain neighbourhoods. I predict that in the second half of the year we will continue to see record-setting prices for units sold and average price.
