Even in the midst of a stay-at-home order and a continuation of December’s lockdown, members of the Ottawa Real Estate Board sold 964 residential properties in January through the Board’s MLS System, compared with 778 in January 2020, an increase of 24 per cent. January’s sales included 674 in the residential-property class, up 21 percent from a year ago, and 290 in the condominium-property category, an increase of 31 per cent from January 2020. The five-year average for total unit sales in January is 786.
Sellers were waiting until after the holidays to list their properties, causing listing activity to be up at the beginning of the month. This gave way to a restricted supply once the stay-at-home order came into effect mid-month. This of course has put strain on buyers. There is so much pent-up demand.
Inventory is up from December, it is still down substantially from last year at this time with 43% fewer properties on the market. This inventory shortage coupled with strong demand triggered a brisk pace to the market. We would have certainly seen higher sales numbers if there were more properties available because the demand is definitely there.
January’s average sale price for a condominium-class property was $380,336, an increase of 13 per cent from last year, while the average sale price of a residential-class property was $677,197, an increase of 31 per cent from a year ago. Compared to December, the average price for residential-class properties has increased by 12 per cent, and the average price for condominium-class units is 7 per cent higher.
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It was a record-breaking year of growth and price appreciation in Ottawa. Coming into 2020 our supply levels were at all time lows and demand was strong. When the COVID hit supply also dropped. The demand did not. Buyers were still very much interested in purchasing. Having a stable economy in Ottawa helped matters. The pandemic even brought other people who were not thinking about buying into the fold. Privacy and pools became high priorities for some buyers.
The end result was freehold prices up 20%! The average sale price was $582,267 in this category. Who would have thought that we would have record price appreciation in the midst of a pandemic. In the condo market prices soared over 19%! It would have been hard to predict these numbers before the start of the year. Even with the lack of inventory the number of units sold were way up too.
This thriving market is due to inventory shortage, multiple offer situations, record-low mortgage rates and buyers from larger markets. Ottawa is a resilient and sheltered market in comparison to others. Ottawa has secure government and tech sector employment that allowed many to work from home. 2021 will see a continuation of Ottawa’s solid resale market, real estate professionals were deemed essential workers and the market was only slightly shaken by the world-wide pandemic. This market is very active, insulated, and strong.
Average sales prices are for 2020 based on MLS sales.
Combined is for all property classes. Arrows are gains from 2019.
OTTAWA REAL ESTATE REPORT
We are entering the year in the midst of rising COVID cases and economic uncertainty. Not to mention some political unrest with our neighbours to the South. This is a unique place to begin. From a real estate market perspective, I look at the supply and demand metrics to determine where things may be going. We enter this year with very few homes for sale, the sales being recorded so far are noticeably higher than last year. Our supply is exceptionally low and demand still quite high. This will once again make Ottawa a very competitive market for 2021.
Ottawa is a growing city, and I am not sure there is a long-term solution to this price acceleration. Rising prices may be a common theme for the foreseeable future. The biggest change I see in the years to come is in the luxury market. There are many more 1M plus buyers out there now.
Half a million can barely afford you a townhouse now in suburbia. It is kind of surreal thinking about my average sale price in my first year in real estate. It was around $220,000.
I do predict that freehold prices will continue to appreciate at a higher level than condos. Many major projects in Ottawa are in the building stages with dozens more approved. At some point we will have enough condos to satisfy demand. That will come sooner than on the freehold side. Some condo owners have felt a bit trapped with COVID and working from home. I have had a few reach out to change into a freehold and have a bit more space to spread out.
OTTAWA REAL ESTATE REPORT
WORKING FROM HOME: THE NEW NORMAL
Ottawa’s solid public sector is a great foundational piece to our economy. This represents 20% of the workforce in Ottawa. These jobs are high earnings and are very secure. Ottawa is in a unique position to have so many jobs that can be done remotely. The high-tech sector in Ottawa has been booming, tech-giant Shopify has made working from home permanent for their employees. This has kept our local economy sheltered from what is happening elsewhere. It may also have an impact on where people decide to live. With many working from home permanently extra space is becoming more desirable.
SUPPLY TRENDS LOWER FOR FREEHOLDS & CONDO
This graph illustrates the supply available in the Ottawa real estate market. It is so interesting to see where we are from an inventory perspective when compared to the last 15 years. Supply remained low for 2020, and we are starting out 2021 with very little inventory. This is the heartbeat of the market. As we witnessed in 2020 with inventory this low, prices were pushed way up as buyer competed for homes. Early 2021 seems to be trending in that direction as well. Will be an interesting year!
INCREASED USE OF TECHNOLOGY
I think that the way people buy and sell real estate will forever be impacted by COVID. This year has proven that we can do so much virtually. Our team has sold 10 homes to buyers from out of town (mostly military) who never actually stepped foot in the house they purchased until closing day. We would virtually walk them through the house and usually have a 3D tour to share with them. I am not suggesting everyone would have a comfort level with that. However, if you could have me walk you through a house while you are in the comfort of your own home, would that be beneficial? Some buyers are opting for this for the first visit and then coming through if they like what they saw on the virtual visit.
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This is the time of year that we usually see a pretty big slowdown in our real estate market. The recent statistics from the Ottawa real estate board suggest that will not be the case this year. The demand is still extremely high for Ottawa real estate. There are so many buyers who are still out there waiting for the right property to become available. These buyers are starting to see more options.
New listings were up by 400 when compared with November of last year. This is 3-4 months of more inventory when compared with last year. A continuation of this trend may lead to a more balanced market in the 2nd quarter of next year. The prices will stabilize as a result. It has been an amazing run in that department. Prices are up over 20% in the residential class segment with Ottawa prices averaging $602,892 in 2020. Ottawa condos are up 19%. The trajectory of this market is a direct result of the severely depleted housing inventory we experienced in the first half of the year.
There has been an influx in the condo market listings as of late. We have 25% more listing in that segment available right now when compared with November of last year. This is leading to more time on the market for condo sellers. This is an interesting trend to watch.
If you have any questions about what’s happening in your neighborhood feel free to reach out!
It has been a very interesting fall market so far. The number of new listings coming to market continues to increase each month. Interestingly the demand is so high that our market is absorbing these new listings quite nicely. However, each month I am feeling the showing activity and offer activity on listings drop. If this increase in listings continues it could start pushing us back to more balanced conditions by late first quarter next year. It will be interesting to watch.
There were 1,937 residential listings and 708 condo units added to the housing stock in October, this is a 48% and 70% respective increase in new listings over last year at this time. I think we need to watch that 70% number on the condo side. The new listings are not absorbing as quickly as the residential class property.
Ottawa realtors sold 2,146 residential properties in October through the MLS System, compared with 1,604 in October 2019, a year over year increase of 34 per cent. October’s sales included 1,665 in the residential property class, up 38 per cent from a year ago, and 481 in the condominium property category, an increase of 22 per cent from October 2019. The five-year average for October unit sales is 1,515. This is a big October by Ottawa standards, especially considering we are in the middle of a pandemic!
The Ottawa market is expected to hold steady even going into what are historically slower winter months. If you want to know what’s happening in your neighbourhood, please get in touch.
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/
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.
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.