Interesting numbers released by the Ottawa real estate market this week. The number of sales are down over 12% in the residential class segment. At first glance, one would think it is a slow market but the lack of sales is only because of the extremely tight supply. There is just not much available to buy right now. This is putting upward pressure on prices. As an example, I have a listing that sold in 2017 for $475k. This year it sold for close to $560k. No real work was done on it. It is incredible to see some of these price gains. Much of this appreciation is in the entry-level segment of the market. It is also very much neighbourhood dependent.
I have been saying in my annual reports for years that Ottawa is undervalued. It seems that others are starting to catch on and maybe we are having a correction of prices. They are just going up rather than down. Our population growth was pegged at 8.8% this year. That coupled with the really good local economy and still relative affordability in the housing market and you have this perfect storm of factors. My hope is that we see a higher than average number of homes for sale this Spring. This would help ease the pressure facing buyers and prices in this market! If you have any questions on your neighbourhood feel free to get in touch.
It was another strong month for real estate sales in Ottawa. Members of the board sold 1,005 residential properties, that is up from 978 last year. What is more impressive is that this was done while the inventory is down. The low inventory has left buyers competing over fewer homes. The sales numbers would have been much higher if there was more available for sale. This has spiked the average home price to over 8.6% when compared to February of 2018. The lack of inventory tells me that this trend will continue likely throughout the year. We could continue to see upward pressure on prices. To put it in perspective we have 40% less available homes when compared to February of 2017 with more demand.
The average price of a residential-class property in Ottawa last month was $466,540. The condo market is also lacking inventory holds down an average price of $288,000, this is up 5.6% compared with February of last year.
In the big picture, Ottawa remains the most stable real estate market in North America. Historically we have always posted gains year to year and have weathered economic storms better than any other housing market. This year we are starting to see weakness in other market centres while Ottawa continues to thrive. This is because our housing is still relatively affordable considering our high household income averages. How long I will be about to tout that is uncertain! Everything points towards an extremely active Spring market.
As always I encourage everyone to think about investment properties. It has been one of the most consistent ways to build wealth. We are fortunate to have such a great opportunity in our backyard. Prices are still affordable but for how long we shall see.
If you are curious to know whats happening in your neighbourhood please feel free to get in touch.
January is usually one of the slowest months of the year in real estate and although we had record low temperatures and lots of snowfall… the Ottawa market was hot. In January the residential and condo property classes there were 820 homes sold. That is a large jump to a 15.8% increase in units sold over January 2018. This is the highest increase Ottawa has experienced in decades. This could be a sign of things to come for our 2019 housing market.
The average sale price for homes in Ottawa continues to rise over last year’s numbers. In January we saw a 1.5% increase in the residential class property and in the condo property class we saw an increase of 7.7% over January 2018.
The $300,000 to $449,000 range remains the most active price point in the residential market contributing to 42.5% of homes sold. The $175,000 to $274,999 price range was the most active price point for the condos market in Ottawa, accounting for almost 54.1% of the units sold. If you are interested in finding out the market trends in your neighbourhood, please feel free to get in touch.
Our team has just invested in a moving concierge program that will be a game changer for our clients. This new platform will assist our clients with everything from changing addresses, transferring home services, updating identification, and getting helpful advice. This can include anything from setting up short term Airbnb accommodations to organizing moving company quotes. Each client will have a dedicated concierge agent. We are completely committed to the client experience. We hope this new service will bring value to our clients and make the transition into the new home as easy as possible.
When I set out last year to undertake this exercise I was optimistic 2018 was going to be a good year. I could not predict just how hot our market was going to be. Early in 2018, there was a significant shortage of housing inventory across the city. This is usual in places like Westboro and the core of the city. This past year that shortage spread to the suburbs-especially in the west end of the city. The lack of inventory was apparent in almost every class of property and price range. The most active being between 300-450k. In many cases, our clients were offering against as many as a dozen or more other buyers. This is common practice in cities like Toronto but a newer phenomenon here in Ottawa. The spring brought lots of new inventory and this helped stabilize things. It was still a seller’s market but as the year went on it became less competitive for properties. Instead of 12 offers on many of the listings, we started seeing 2-4 offers depending on price range. Let’s have a look at the numbers driving our market.
KEY INDICATORS
AFFORDABILITY
Ottawa households have one of the highest household income averages in Canada. If you see the graph on the following page you can see that prices are still relatively affordable for Ottawa buyers. This graph looks very different for buyers in cities like Vancouver and Toronto.
IMMIGRATION
If you Google best places to migrate to in Canada, Ottawa seems to be the number one choice. I am seeing many more immigrants choose Ottawa as their final destination. Toronto and Montreal are of course popular but when someone researches where to live in Canada, Ottawa comes out close to number one in almost all categories.
The common misconception out there is that these immigrants do not have the funds to purchase real estate. That is not always the case. In many instances, it is their credit or lack thereof that may be holding them back. In any case, these immigrants are coming at a record pace and will likely be purchasing real estate in the future.
MORTGAGE RULES AND INTEREST RATES
Banks have been forced to stress test buyers at a full 2 percentage points higher than the interest rate of their mortgage. This can impact purchasing power by almost 20%. I see the need for this but as house prices rise in major market centres there has been plenty of pushback. Interest rates have been slowly rising and this has put pressure on affordability for some buyers. If this trend continues it will have an impact on the market for sure. With the economy being more sluggish, the need for further increases may be curbed.
LOCAL ECONOMY
Ottawa has always been an underrated city in my view. We have a strong local economy with one of the highest median household income averages in Canada. Our unemployment rate is at historically low levels. It is a prototypical government town that has a growing technology sector and lots of solid, high paying professional jobs. It is only a matter of time before our prices surge and we become a global player in real estate. For a world-class capital city our prices still might be a bargain. Time will tell!
ELECTION YEAR
Housing affordability has climbed up to be one of the top issues for millennials. This makes it an election issue. A recent poll found that 64% of millennial voters want the government to do something about climbing prices. We will see the politicians respective platforms later this year. My prediction is that some of these platforms will have policies that will make it easier or more affordable for buyers to purchase. It could mean the return of 30-year amortizations. The stress tests might be eased or there could be a new policy altogether. Something to watch for sure.
VACANCY RATE
This year renters are facing a 1.3% vacancy rate in Ottawa. This is an all-time low. It has made finding a rental very competitive. Often times renters are actually in multiple offers for rental properties. There is a similar pattern in other major market centres across Canada. As house prices increase it is forcing some people to rent rather than buy. Might be a great time to purchase a property to rent out.
GROWTH AND INFRASTRUCTURE
Ottawa is growing and maturing into a world-class city. We should all be grateful to live in a city with such a high quality of life. By March we will have light rail going right downtown that will make life easier for commuters. This will just be the start of a much broader transportation plan. We have a super hospital that will be coming online in the years to come. Lebreton will eventually get the green light for redevelopment. Lots to be excited about. These will help fuel our economic growth in the years ahead.
2019 FORECAST
I believe it will be another strong resale year for Ottawa homebuyers and sellers in 2019. There is still pent-up demand and lots of buyers looking to purchase. This was reinforced just before Christmas as our team was involved in 2 multiple bid situations in the Fairwinds area. The targets were modern semi-detached townhomes, one that we sold for a record price with 3 offers. This is not the kind of activity you would typically see just before Christmas. It is indicative of the market in the entry level price points. The $350k-450k market will continue to be red hot this year. I have spoken with a few builders who had record years. Next year many homebuyers will be on the move to their newly built homes. This will hopefully create some much-needed inventory in 2019.
I predict we will have another seller’s market that will slowly slide to a balanced market by the time 2019 is complete. Barring an international crisis, it will be another great year for the Ottawa Real Estate market.
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The Ottawa real estate market has been so interesting to track over the past 12-18 months. It simply continues to stay heated while other major markets in Canada cool.
Here is great insight from our board president Ralph Shaw:
“When you look at what’s happening in real estate markets across Canada, Ottawa’s market performance is the polar opposite, Our market fundamentals are very strong, and we have experienced steady growth for many years, and indeed decades.”
This is kinda what I have been saying in all my recent newsletters. The foundation of our market is so solid with record unemployment and high consumer confidence. Affordability is still very good in relation to our incomes. As we examine November sales numbers we see the drop in sales by 7.2% Over November of last year. This is a reflection of the lack of inventory available to buyers, not any type of cooling in the market. Good inventory is tough to find. Keep in mind most sellers also need a good property to purchase before they put their houses for sale. I think next year we will see some easing of this inventory challenge.
If you are curious to know what is going on in your neighbourhood, please feel free to get in touch.
Each year CMHC releases detailed reports on each of Ottawa’s major market centres. Interestingly, Ottawa is the only city to experience continuous growth in both sales and prices since 2015. We are outperforming other markets because of our healthy economy and relative affordability. The unemployment rate is at its lowest rate in a decade. CMHC suggests prices will continue to climb in both 2019 and 2020 in Ottawa. Which makes me wonder why everyone does not have an investment property.
I am a proponent of having real estate as part of any balanced portfolio. We have one of the best real estate markets in the world for this right here in Ottawa. Our prices are still affordable and the most recent vacancy rate in Ottawa was 1.4%. This is extremely low. There are multiple bids on rentals right now! Many first time buyers are being priced out of the market. It may be now or never-prices may rise to the point of no return.Here is what is happening in the Ottawa market.
The average sale price for homes in Ottawa continues to rise over last year’s numbers. In October we saw a 5.7% sale price increase in the residential class property and in the condo property class we saw a slight increase of 0.6% over October 2017. The continued low inventory in Ottawa isn’t slowing down the number of units sold. They are still at an all-time high over the past 5 years. In total there were 1,383 homes sold in both property classes in October which is an increase 11.8% over last year. The number of condo units sold last month soared into the double digits with an increase of 24.1% units sold over last October.
The $300,000 to $449,000 range remains the most active price point in the residential market contributing to 43% of homes sold. The $175,000 to $274,999 price range was the most active price point again for the condo market in Ottawa, accounting for almost 53% of the units sold. If you are interested in finding out the market trends in your neighbourhood, please feel free to get in touch.
The average sale price for homes in Ottawa continues to rise over last year’s numbers. In September we saw a 7.9% increase in the residential class property and in the condo property class we saw an increase of 7.6% over September 2017. These are very impressive numbers. Even with a continued low inventory in Ottawa, the number of homes sold is at an all-time high over the past 5 years. If we had more listing for sale we would have shattered the record in September. In September the residential and condo property classes there were 1,393 homes sold.
The $300,000 to $449,000 range remains the most active price point in the residential market contributing to 46% of homes sold. The $175,000 to $274,999 price range was the most active price point for the condos market in Ottawa, accounting for almost 57% of the units sold. If you are interested in finding out the market trends in your neighbourhood, please feel free to get in touch.
The Ottawa summer real estate market was busier than normal. No surprise to see strong August numbers coming through from the Ottawa real estate board. I think this trend will continue in the fall months ahead. The city continues to have low inventory which has put an upward pressure on prices. Even with the rising prices by all economists measures we still do live in a relatively affordable city. I am not sure how much longer I will be able to say that. A couple years at the most I believe. People are catching on to just how great Ottawa is.
The 300k to 450k price range in residential properties remains to be the most active price point. The condo market continues to be a great story. Sales are up over last year over 10%. The condo market continues to fill in the gap as we deal with the low residential inventory
If you are curious to know what’s happening in your neighbourhood please get in touch.
As an owner of Ottawa investment properties, the upcoming legalization of marijuana is another element that needs to be considered when finding tenants. When this law is passed it would grant the right for individuals to grow up to four plants in their home. I certainly don’t want them growing those plants in my investment properties. It can pose health risks from the potential growth of mould, fire risk, and the significant damage due to high humidity requires. Most importantly your property value could plummet if the house was deemed to be a “grow op” This is not a label you want. Also, smoking marijuana can be worse than cigarette smell in terms of getting rid of the bad odours.
It remains for the courts to determine if a tenant’s right to smoke marijuana for medicinal purposes is greater than a neighbour’s right to not smell it, and a landlord’s right not to have it happen in their property. Especially since there are alternative forms of medicinal marijuana including pills, capsules and oil. I am sure there will be lots of upcoming cases that examine this complicated legal question. Something to watch for.
So how can you protect yourself?
Having strong clauses in your lease agreement is important. Here is one example:
Smoking, which includes tobacco and marijuana, any electronic versions and anything smoked for medicinal, recreational or remedial purposes, and growing plants of any type or quantity which includes marijuana, cannabis and hydroponics, are not permitted to be grown or cultivated anywhere in or on the premises, including common areas and the tenant’s rented unit.
I also am a big believer that the due diligence process is an important step. To be honest, if I suspect they are smokers I will not rent it to them. Even if they say they would never smoke in the house. I just don’t take the chance. Besides the credit checks, I will ask previous landlords if they were smokers and I often try to find pictures of them through facebook etc to get a sense of who they are. Might sound excessive but once your tenants are in they are hard to get out! For the record there is nothing wrong with smoking weed, I just don’t want people to smoke or grow it in my investment properties.
Our team has just invested in a moving concierge program that will be a game changer for our clients. This new platform will assist our clients with everything from changing addresses, transferring home services, updating identification, and getting helpful advice. This can include anything from setting up short term Airbnb accommodations to organizing moving company quotes. Each client will have a dedicated concierge agent. We are completely committed to the client experience. We hope this new service will bring value to our clients and make the transition into the new home as easy as possible.
