September has shown us that the market trajectory is continuing upwards. There continues to be an increase in new listings and demand is remaining strong. September saw 400 more new listings than in August. These new listings were easily absorbed in our market. As I mentioned last month, if these new listings continue it may push Ottawa back to a more balanced market. I am already seeing some properties receive less offers than just two months ago. It will be an interesting few months coming up. With COVID cases rising will it finally be enough to slow down this market? That is yet to be determined. For now Ottawa remains very much in a sellers market.
Ottawa Realtors sold 2,329 residential properties in September through the MLS System, compared with 1,547 in September 2019, a year over year increase of 51 per cent. September’s sales included 1,759 in the residential-property class, up 58 per cent from a year ago, and 570 in the condominium-property category, an increase of 31 per cent from September 2019. The five-year average for September unit sales is 1,602.
Average prices in September have hit an all-time high, with the most movement at the higher end of the market which is driving the average price upwards in this section of the market. If you would like to know what is happening in your area, please get in touch.
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.
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.
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.
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 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.
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.
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.
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.
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.