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.
It was an incredible year of growth and price appreciation in the Ottawa real estate market. Prices were up in all categories. Year-end figures show the average freehold property sale price was $486,590 in 2019. This represents an 8.9% increase over the previous year. In the condo market prices soared over 9%! It would have been hard to predict these numbers before the start of the year.
These incredible gains are being fueled by the lack of supply and strong demand for Ottawa real estate. As the year went on the supply tightened and this put upward pressure on prices. The prices really started to push up in the 2nd half of the year. In some neighbourhoods in Nepean and Ottawa west, I have seen a price appreciation of 6% between sales in March and sales in September. This is because supply tightened as the year went on and in addition, more buyers entered the marketplace.
In 2019 Ottawa’s population grew to over 1 million people. Our city is maturing into a world-class capital before our very eyes! The new LRT line was unveiled and many new projects are on the way. Legacy projects like the civic hospital relocation, LRT expansion, and Lebreton flats redevelopment are on the horizon. This combined with the insatiable demand for Ottawa real estate should keep our construction market strong for the foreseeable future.
Average sales prices are for 2019 based on MLS sales.
Combined is for all property classes. Arrows are gains from 2018.
OTTAWA REAL ESTATE REPORT
FORECAST 2020
The Ottawa real estate market is showing no signs of weakness. Supply issues will persist in 2020. I don’t expect the inventory will recover in the near future. The absorption rate of our current inventory is like nothing we have seen before! Prices are expected to continue to grow over the upcoming few years. The demand for our real estate is at an all-time peak. This trend will continue to put upward pressure on prices throughout the next few years. Although prices are going up relative to our income we are actually still in a sustainable position. Prices in Ottawa, when compared with our earnings, are still affordable.
Below you can see a table of real estate prices in Ottawa since 1981. The only declining years are in red. The table illustrates just how stable our market is. The only declines were consecutive (94-96) and houses lost less than 3% in each of those years. If you were at a craps table and saw this much black on the board how much money would you be prepared to invest. If you are a long term investor it would be pretty hard to find a scenario where you could lose.
Based on OREB RES & CON MLS Sales | 2020 Prediction
OTTAWA REAL ESTATE REPORT
KEY INDICATORS
OTTAWA: RELATIVELY HIGHER EARNINGS
Ottawa’s solid public sector is a great foundational piece of our economy. This represents 20% of the workforce in Ottawa. These jobs are high earnings with very good security. When I think of my own network of friends, almost every couple has at least one person working for the government. In some cases, both spouses work there and this creates some very high household income. This past year saw a 6.9% increase in our weekly average income. We have not seen that kind of income growth in Ottawa since 2001. When we see our earnings higher than our neighbours down the 401, it surprises some people. Of course with the financial sector in Toronto, there is more wealth and one-percenters. Ottawa just does a better job with the distribution of wealth.
SUPPLY TRENDS LOWER FOR FREEHOLDS & CONDO
Supply is the single biggest issue in our market. It is so interesting to see where we are from an inventory perspective when compared to the last 15 years. We are at the lowest point in both the condo and the freehold segment of the market. Look at the condos available in 2015! Over 6000 on the market. This is the heartbeat of the market. When we see inventory this low, prices can only go in one direction! The little secret I have been telling people about Ottawa’s bargain real estate prices is out! Our market is on fuego.
STEADY EMPLOYMENT GROWTH EXPECTED
The local economy and job market in Ottawa are solid. Steady job growth is expected to continue over the next few years. It is good to see that full-time job growth is up 5%. This is important because people that occupy full-time jobs are much more likely to be approved financially to purchase real estate. Our capital city also is one of the hottest and most diverse tech hubs in North America. Overall the health of our local economy couldn’t be better.
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Another year is almost in the books! This one has flown by. This year has been the most active housing market I have experienced. The numbers bear that out. In November new listings were being absorbed by buyers at a record-setting pace. Here is what our board president had to say:
“Our inventory is not having a chance to build as it is being absorbed as quickly as it comes on the market. That’s why there are so many sales every month even though the supply stock is low,”
If we compare November of this year to last year, the price difference is almost shocking! See the statistics in the chart. We are up 16.9% on the freehold side and 9.8% on the condo side of things. At the start of next month, I will be providing a very detailed annual market report that breaks down all the numbers.
There is a slight cause for concern with the recent announcement that Canada lost over 71,000 jobs in the last month. This represents the largest drop in employment over a one month period since the financial crisis. Ottawa is always sheltered from this unless it hits the public service. Something to keep an eye on for sure.
If you want to know what’s happening in your neighbourhood, please feel free to reach out.
It is a winter wonderland out there already. What the heck is going on! A snow day on Nov 12th is madness!! Some people may be wondering if the cold weather will put a chill in this hot real estate market. I am not sure that will be the case. The numbers from October reveal that there is some madness in that regard too!
Our market is summed up nicely by our board president:
“New listings are down, inventory remains scarce, and yet more homes changed hands this October than in the past decade and a half,” reports Dwight Delahunt, President of the Ottawa Real Estate Board. “It’s perplexing at first; however, when you consider the current breakneck transaction pace in the Ottawa resale market, often requiring homebuyers and sellers to make swift decisions, it makes sense.”
When I analyze the market it is clear to see we are firing on all cylinders. What I see is that for the first time you have all segments of the market including condos and freeholds beings extremely desirable to buyers. In years past it might have been the condo market that was hot or the last few years, it was more about the freehold market. Often times it could be different locations that were “hot”. This year it seems to be every segment in almost all locations. Especially West of downtown. The hottest locations are experiencing price increases of over 5% when compared to March and April of this year!! Many buyers back in the Spring were patient and that patience is long gone with buyers now realizing they have to pay a big premium (in some cases) to secure their home.
I get why our market is what it is. We have been undervalued for a long time. I have said this in my annual reports for years. Even now in relation to our average earnings and the extremely high quality of life in our city, I can still make that case. It is just not much of a secret anymore! If you want to know what’s happening in your neighbourhood let me know. We are always happy to be a real estate resource for you.
The fall market is feeling a bit like the Spring market this year. There is the same sense of urgency with buyers and sellers are getting premium prices for their homes. Our team just had a house go up for sale last week and we priced at the higher end of the market. We had over 90 people through the open house and it sold for $65k more than what they were asking. Frankly, I was surprised at such a favourable outcome for our clients. They were quite shocked to see the end selling price.
We have not seen September sales numbers like these in 15 years! We had 1549 properties change hands including condo and residential properties. This is up from 1386 from last year. The numbers would have been even higher if there were good available houses for sale. It is quite remarkable that purchasers are finding houses that meet their needs so well with such little inventory. Buyers are just less picky this year because they know the challenges they face to secure a house.
It is a tough market for buyers but we have had some great successes over the past few months. Buyers just need to be a little patient and strike when the right property becomes available. They also need great representation now more than ever!
The sweet spot price point remains the $350,000 to $500,000 price point. This accounts for 43.5% of all sales in September.
Every neighbourhood is unique. If you want to know what is happing in your area please feel free to get in touch.
Summer is over and the fall real estate market is getting back into full swing. I have noticed already just a few days into September that activity is picking up with buyers and sellers. The fall is typically a very busy time to buy and sell in Ottawa. This year might go down as the busiest ever. There are so many buyers out there just waiting for available homes. Our inventory levels were down quite a bit in August and yet our sales were up when compared to last years numbers. You don’t need to be a rocket scientist to know that this will continue to put upward pressure on prices.
There has also been lots of talk of a recession looming. I think this might be inevitable as the US has gone through the longest recovery in history since their last slow down. However, the most common misconception out there is that housing prices always go down in economic slowdowns. That is just not true. The last economic meltdown in the states, of course, resulted in lower prices but that was because the crisis was directly linked to the wild wild west lending practices in the market.
Bottom line is that interest rates are low, Ottawa’s economy is great, and prices are reasonable relative to our average earnings here. I see strength in our Fall market for sure.
As part of a full-service real estate team, each week I preview and show several properties to various buyers, and host open houses for our seller clients whenever possible. The 2 most common questions I hear day-to-day are:
1) Why are the current owners selling?
2) What is the square footage of the house?
Interestingly, as licensed members of the Ottawa Real Estate Board, we are not permitted to display the square footage on any listing. Whatever the reason behind this rule, the fact remains.
Square footage can be important when comparing the property value of the property with another, or even just to assess if there is enough space to hold all of your current furniture and effects (and growing family members). For appraisals and assessments, it is often measured by simply multiplying the length and width of the exterior walls of the house. When you consider this, overall useable Living Space can become a more essential factor to consider.
What are the reasons that are motivating you to make a move?
Do you need more overall space, more closet space, or a more open-concept space?
Some homes have unique jogs and cut-outs along walls and ceilings, reducing the amount of space you are able to occupy or renovate. An older century home may have a large den, parlour, and dining room, and therefore an increased footprint, yet also have a long hallway upstairs and 3 bedrooms with gabled ceilings that are a nuisance to you and your growing children… and no master en-suite. Or, a previous owner may have blown out a bedroom wall to create their dream en-suite + walk-in closet, and now Mr & Mrs Buyer are handcuffed because despite 2000+ sq ft above grade, what they really need is another bedroom. Or, 4 large bedrooms and a loft upstairs might not be enough if there is no room on the main level for the home office you really need.
There are many things to consider when buying your next home. A deal-breaker to one buyer may be a non-issue to another. A great idea for everyone is to take some time to write a list of your Wants and Needs in a new home, get on the same page with everyone involved, and enlist the service of a licensed Realtor who can help you stick to your plan and make informed, objective decisions in order to achieve your individual real estate needs.
We had a chance to sell a wonderful house for some relocating clients. They tried previously to sell their home with another brokerage. I want to share with you the pictures that were on the MLS.
Previous MLS
Our MLS
The photo themselves are of weak quality and the house was not staged or prepared by the Realtor. It matters who you choose to sell with. Here is what we did for the house:
The Ottawa real estate market had a great July. We have not had this kind of activity in a July for 15 years. Typically after a busy Spring market things slow in the summer. This year is the exception. We had over 1800 sales on the MLS system. There is just so much demand out there right now for Ottawa real estate. I am starting to see more inventory come to market which is good news. Hopefully, this will lead us back to a more balanced market. Right now there is around a 1 months supply of housing. This is deep into a sellers market. We would need to get to at least a 3 month supply to start getting closer to something more balanced.
The condo market had another strong month. Condo prices have fully recovered and you can see by the sales numbers that this segment of the market is having a resurgence. This is good news for condo owners and builders. Lots of optimism surrounding the Ottawa market right now. I anticipate a very strong fall market. If you are curious to know what’s happening in your Ottawa neighbourhood feel free to get in touch.
