I think everyone understands that the Ottawa real estate market is a much different landscape today than it was in February. The current prices feel similar to where they were last year without the bidding wars. A few people have asked if I think the market is going to crash or if there will be a correction. Well, the correction is already happening and I don’t see it going much lower depending on interest rates. Right now I am feeling a very close connection between prices and interest rates. More so than usual. Interestingly a home in March was purchased at a much higher price but way lower rate and it is quite comparable on a monthly payment to a similar home in today’s market selling at a lower price but with a much higher interest rate. Essentially affordability has not changed too much. Ottawa is weathering the drop in prices better than other market centres in Ontario. I expect the latest rate increase of 100 basis points which is the largest since 1998 to slow our market even further over the upcoming few weeks. I do think that the proposed hike in September will be lower than they have forecasted because the market has reacted and will continue to slow as a result of the Bank of Canada’s decision. Again, Ottawa will not be impacted as much as other major Canadian cities.
What are the main reasons for the price drop?
No matter what you seem to be doing, everything is more expensive! Combined with the rising interest rates that were brought in to curb this and the already high real estate prices and you have a perfect storm. Buyers can not simply afford the price gains we have been seeing. With the interest rate hikes, many have been priced out of the market. Then you get a looming recession and all the doom and gloom media coverage. The Ottawa market has never changed so fast in its history. 5 months has pretty well wiped clean the previous year’s gains. We also don’t have the pandemic-driven demand anymore.
Buyers are taking the wait-and-see approach
Buyers are engaged in the market and are looking at homes that are priced well. If sellers are priced at yesterday’s market they are not getting any activity at all. Buyers are also very much on the sidelines taking a wait-and-see approach. Many are trying to determine if they should wait a few more months as prices have been declining or lock-in on something now before interest rates move up more. Affordability could end up being the same.
What is the strategy to sell now? Hold offers?
It has been interesting talking to other agents about this and pricing strategies. For the most part pricing for multiple offers is not the desired strategy right now. Price the house well and get buyers through and sell it the traditional way. Some more patience is required as homes are staying on the market longer. With more competition, the way you present your home will be even more important as will your representation.
My thoughts on the market
My home has lost quite a bit of equity in the past 6 months. However, I have no plans to sell for 20 years so I really don’t care too much. Everything will go back up again eventually. I truly believe this correction was very important to the overall health of our market.
This is exactly where Ottawa needs to be right now.
The market has really changed drastically in the past 4 to 6 weeks. This is the fastest I have ever seen a market shift in my career.
Why has the market shifted?
There are really several factors at play right now. Interest rates have been steadily rising through the first half of this year. This of course is going to have an impact on the affordability of homes for buyers. Inflation and the cost of everything else have gone up and this leaves households with less money available for housing. Talk of a recession, the war in Ukraine, buyer fatigue, and the trillions of lost value in the stock market. These are all some of the factors involved. I also see the negative news that an imminent bubble bursting could happen with prices. Negativity tends to be news that sells. This certainly has an impact on qualified buyers and their reluctance to get into the market now. I don’t necessarily blame them either.
What should a seller do now?
What is not reported is that Ottawa is still in a sellers market. Sellers just don’t have the extreme leverage in the market that we have been accustomed to seeing. They need to be more realistic about the market they are in right now. Homes are not selling as fast and in many cases, buyers have conditions to fulfill. This is not necessarily a bad thing on either side. Sellers will adjust their prices to the current market and have to be patient as it’s taking longer to sell their homes. Houses are off their peak value but holding out for yesterday’s prices will not do any good.
What about buyers?
For buyers, there are more houses to choose from and better value out there right now. The challenge with buyers is timing. Many buyers have pulled back because they don’t want to buy near the peak of the market. Some are betting that the market will continue to decline and they will buy at a lower price. If there’s one thing I’ve learned in my career and as an investor. Never try to time the market. It just doesn’t work. This is advice from Warren Buffet. There is good value out there now and I believe the long-term prospects of Ottawa‘s market are good. This advice is only applicable to buyers not speculating in the market. If they are looking long-term I think now is a good time as any.
There’s a lot to navigate in Ottawa‘s real estate market right now. If you want to know what’s happening in your neighbourhood please feel free to reach out to our team.
The real estate market has shifted. There is no question we are not in the extreme seller’s market we experienced in February. Prices have slightly retreated from the peak. One of the biggest differences I am seeing is that buyers have been much more cautious. The recent interest rate hike and announcement of more coming have certainly played a major role. We have also seen an influx of new listings in Ottawa that is taking some of the pressure off the market. In addition to the new homes, we have sellers that want to keep trying to get prices that were out there a few months ago. So we see on the MLS lots more options. With the increase in inventory, buyers feel that if they don’t secure one place they will have an opportunity at another. They are also being spread out more with their offers.
Now that sounds a bit gloomy for sellers but it is not a reality statistically. We are still in a very strong seller’s market. It is just now one grounded in a sense of reason! Price escalation is tempered. Realistic sellers can expect to get great prices that they could have only dreamed about 2 years ago. The average sale price of a residential home is still up 11.6% and the average price of a condo is up 11% over April 2021.
Do you know one of the most common questions I’m getting right now about the real estate market is, are we at our peak? Or is the market starting to decline? It’s a tough question to answer because there are a lot of variables at play right now. We have interest rates rising by a half percentage point in the upcoming few weeks after a previous increase of a quarter of a percentage point just about a month ago. This is going to make the current prices in Ottawa that much higher for prospective homebuyers. This will certainly have an effect on what buyers are willing to pay for Ottawa real estate. My thinking is that house prices are going to stabilize. In fact, I believe that’s already happening. There are houses that sold in February of this year that would not warrant the same price in today’s market. The biggest reason being is that there are more houses for sale and buyers are spread out with more options available to them. My prediction is that you’re going to see continual stabilization of the market in the upcoming two months as more inventory comes to market I still think it’s going to be very much a sellers market but the days of 15 or 20 offers on almost every property I think are going to be behind us which is good for the overall health of our local real estate market.
We are up from the five-year average for total unit sales, which for March is 1,792. Prices are continuing to climb slightly, up 2-3% from February, sitting at $853,615 for a residential-class property, up 12.5% from last year, and $479,405 for a condominium-class property in March, up 10% from March 2021.
Overall, we are just slightly over (.6%) a half month’s supply of inventory, this is still considered a seller’s market. A balanced market requires at least four months of inventory.
Our team has strategies that can help both our buyers and our sellers in this type of market. Please reach out if you have any questions about the current market or anything else we can help with.
Things are picking up as we head into the Spring season. We have seen a 52% increase in transactions from January to February of 2022 via MLS. This is a strong indicator that the Spring market has sprung.
The number of new listings in February (1,762) offers some hope for prospective Buyers. At 4% higher than the five-year average and 12% higher than February 2021, it resulted in an almost 10% increase in residential-class property inventory compared to last year at this time.
There is hope that the trend of increased new listings will continue so that the housing stock can be replenished.
We are now sitting at less than a month’s worth of inventory, which is still looking like a seller’s market. This means buyers need to have all of their financing set up so that they can move quickly in this market.
Our team has strategies that can help both our buyers and our sellers in this type of market. Please reach out if you have any questions about the current market or anything else we can help with.
We are starting this February in very much a similar way to the last 2 years. Housing inventory in Ottawa is scarce and sellers are cashing in on this once-in-a-lifetime market. This year feels different because we are already starting with high prices thanks to the last few years of double-digit increases in Ottawa home prices.
Buyers seem to be comfortable paying huge premiums to get in on the market and secure their house. This is leading to some pretty eye-popping sales in certain neighbourhoods. We have had first-time home buyers spending upwards of a million dollars on a purchase. It is actually a frustrating market for a Realtor because there is quite a bit of heartbreak! Sellers in many cases can’t put their house up for sale because they can’t secure another property. So we are in this cycle! I am hopeful that we can get to a place this year of a more balanced market. I had originally predicted that prices would rise less than 10% this year. Is it too early to have a mulligan on this?
One of the biggest changes in our market is the number of properties selling for over 1M. Do you remember when 1M was a big number?
Sales in Ottawa over 1M
2020
2021
2022
We have had one of the hottest real estate markets in the world in the past few years right here in Ottawa. We are making up for years of undervalued real estate. Now we are heading to a place where the average house is going to be out of reach for our middle-class families, especially those who are not in the market already with a house.
Do you ever feel like you are in the movie Groundhog Day? Well, I certainly do. We are starting the year with school online, COVID is still a part of everyday life, and for home buyers, very few homes to choose from. Prices are smashing price records and making economists and analysts look like they have no idea what they are doing. Is 2022 the year we get back to some normalcy? I don’t think anyone could have predicted that a global pandemic would send housing prices through the roof. The question now becomes well what’s next?
Average sales prices are for 2021 based on MLS sales.
Combined is for all property classes. Arrows are gains from 2020.
OTTAWA REAL ESTATE REPORT
FORECAST 2022
It has been hard to predict how the market would react to the pandemic, now, two years in, it is even more challenging to make any sense of it. I have read everything available including CMHC reports, Economist, and leading analysts’ predictions. This year I feel like everyone is being careful with their thoughts. Likely because no one really knows, impossible to predict the unpredictable. I refer to the economic principle of supply and demand. A trend over the pandemic is low inventory, hovering around, or just under one month’s supply, a true seller’s market. Currently, supply is very low, with just this one indicator it is difficult to see how prices will not go anywhere but up.
REAL ESTATE CHANGING
Our industry is constantly changing. There are many new players in the local market that offer a wide range of services to buyers and sellers. You can auction your home, sell it with a call centre in Toronto, use a local Realtor or put a for sale sign on the lawn yourself. There are 3500 agents in Ottawa to choose from. Having this many choices is overwhelming but also very good for the consumer. It forces everyone who wants to compete for your business to up their value proposition. Our team has completely revamped our services for 2022. We are always striving to bring the best value to our clients. We have a menu of services that will help us compete against any platforms. So if you are in the market this year to buy or sell, give us a call.
Based on OREB RES & CON MLS Sales | 2022 Prediction
KEY INDICATORS
Our Country’s Population Growth in 2021
G7 Population Growth 2021
Canada has had the highest population growth in the G7 and also the lowest per capita stock of housing. Quite simply we have a housing supply crisis. This is one of the many reasons why our market prices have escalated so quickly. We can look at all the new developments and cranes in and around our community but it is not enough to have an impact on price gains in 2022. Ottawa in particular has been a sought-after city for new immigration due to its high quality of living.
Historic Ottawa Freehold & Condo Inventory Since 2004
Inventory
As mentioned above. The very core of the price increases is the basic economic principle of supply and demand. In Ottawa we simply do not have enough housing for everyone right now. This is putting upward pressure on prices as buyers compete for what becomes available.
Historic Canadian Inflation Rates Since 1995
Canada’s Inflation Rate
Prices are rising rapidly everywhere. One interesting stat is that container ship costs have gone up 500% since 2019. Those costs get passed along to the consumer. Housing, cars, equipment, lumber, and especially food. COVID has brought about so many unique challenges that will have lasting impacts on our economy. One of them will be that the cost of goods and services will continue to rise. This will have an impact on what buyers will be able to afford.
Variations in Bank of Canada Interest Rates Since 2000
Bank of Canada Overnight Interest Rate
Right now interest rates are the big equalizer. The low rates are making the high prices relatively affordable. How long can these rates stay low? Central bankers are in a tough position. They could decide to act because prices are rising so fast and are not in sync with incomes. If the Bank of Canada should go this route they would also risk causing a housing market downturn. My prediction here is that rates will rise and help slow our market. This will happen in the late summer.
If you are curious about your home’s worth please fill in this form for a no-obligation market assessment.
Ottawa Real Estate Board Trend Analysis – Residential Property Class
WE GO ABOVE AND BEYOND FOR OUR CLIENTS
We are so pleased that we were able to host our Annual Santa Party this year. It was so great to be able to thank our clients by finally being able to hold an event again. We also continued a new annual tradition with our 2nd Annual Stittsville Food Bank Fundraiser, we partnered again with Maverick’s Donuts Stittsville who generously donated their holiday 6-pack donuts for us to sell in support of the food bank. The team matched each donation and raised $2,000 again this year! Our mission is to create a raving fan service experience for every client and bring value long after our clients have bought or sold real estate. If you have any real estate needs in 2022 give us a call.
If we compare this past November’s real estate market to November 2020, we again see that it is skewed as the Spring market was pushed into Fall in 2020 due to the pandemic lockdown. In comparison, November’s unit sales tracked 14% higher than 2019 (1,284), a more relevant base year. This is good to keep in mind when taking in the most recent market statistics.
1,459 residential properties were sold in November compared with 1,605 in November 2020, a decrease of 9%. November’s sales included 1,086 in the residential-property class, down 10% from a year ago, and 373 in the condominium-property category, a decrease of 7% from November 2020. The five-year average for total unit sales in November is 1,348.
Average sale prices for November are for a residential-class property $716,992, an increase of 19% from a year ago, and the average sale price for a condominium-class property was $432,099, an increase of 19% from 2020. With year-to-date average sale prices at $719,956 for residential and $420,762 for condominiums, these values represent a 24% and 16% increase over 2020, respectively.
Even though there were significant increases in average prices over November 2020, month-to-month price accelerations have tapered off slightly, with average prices for residential units on par with this past October’s and condo average prices increasing by 7%. For buyers, this is a much better situation than the monthly price escalations the first quarter of 2021 had shown us.
Ottawa is still sitting at one month’s supply for inventory, still signaling a seller’s market. Supply constraints will continue to affect prices until more inventory is made available.
As always if you have any questions or would like to know about any activity in your neighbourhood feel free to reach out.
October’s market was a bit more normal, in terms of units sold, given the regular Fall season, it was active, busy, and things seem to be stabilizing. Compared with 2020, the statistics are showing a decrease in units sold, which is still reflective of the shift of the 2020 Spring market to Fall 2020, which was due to the Spring 2020 lockdown.
Inventory is remaining at a one-months supply for residential and a 1.2 months supply for condos, which is why there is still pressure on prices. With this amount of inventory, it is still considered a sellers market. The only way to find balance in this market is to increase available housing stock.
Low inventory and a lack of suitable housing options are not giving buyers who want to move up the property ladder or those that want to downsize a place to go. Because of this, properties are not being freed up for entry-level homebuyers.
Another piece of the puzzle is rental properties, Ottawa Real Estate Board has noticed a substantial increase in the number of rental transactions. This could suggest that some properties have been purchased or held on to for investment purposes. This active rental market may be another contributing factor as to why there aren’t more properties coming onto the market for sale.
All of these factors put together equal a tough market for buyers to navigate.
As always if you have any questions or are interested in knowing more about activity in your neighbourhood, feel free to give us a call.
The Ottawa Real Estate Market seems to be back to a typical September market. It started off slowly due to the long weekend and back to school, but it picked up again near the end of the month.
Last month, 1,607 residential properties were sold, compared with 2,314 in September 2020, a decrease of 31%. September’s sales included 1,244 in the residential-property class, down 29% from a year ago, and 363 in the condominium-property category, a decrease of 36% from September 2020. The five-year average for total unit sales in September is 1,648.
Statistics are showing a considerable year-over-year decrease in transactions, due to the lockdown in Spring of 2020, the peak of the market shifted from the Spring to the Summer and Fall months. For some perspective, the number of transactions in September was 4% higher than in 2019 (1,547) and 16% higher than 2018 (1,387).
September’s average sale price for a condominium-class property was $425,362, an increase of 14% from last year, while the average sale price for a residential-class property was $702,155, an increase of 13% from a year ago. With year-to-date average sale prices at $720,492 for residential and $421,062 for condominiums, these values represent a 25% and 17% increase over 2020, respectively.
Inventory is still sitting at just over one month’s supply of housing stock at this time. There were 2,252 new listings in September, an increase of 216 units over August; however, the number still falls beneath the five-year average and is much lower than this month in September 2020 (2,906). Price escalations are inevitable given the supply challenges we have been experiencing for several years now combined with the unrelenting high demand.
As always if you are interested to know more about the market, or if you would like to know what a home in your area sold for, please get in touch!
Our Country’s Population Growth in 2021
Historic Ottawa Freehold & Condo Inventory Since 2004
Historic Canadian Inflation Rates Since 1995
Variations in Bank of Canada Interest Rates Since 2000
