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.
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!
If anyone is interested. Here are some random thoughts on a few things real estate and otherwise.
Capital Gains on Primary Residences?
This is not going to happen. I have been asked this a few times this past month. Governments want to get elected again and having 100% of homeowners against them will not help their chances. Could they increase the capital gains on investment properties or flipping. I believe that could be the case. But they will never come after our gains on our primary residence.
Changing Market
Sellers really need to start having better expectations of what they are going to get in this market. I recently priced out a house that may have gotten $1 million as a sale price in April. Right now, I’m seeing that it may be more like 925 to 950k. The seller seemed very disappointed at this number. This is a house that would’ve been worth 775 last year. I would still say it was a very good investment we are just not selling at the all-time high right now.
The Power of Staging
One of the hardest things to do as a real estate consultant is showing people the value of staging. It is hard because there is no clear return on investment. What I mean by that is when you do the staging there’s no set amount that you’re going to get back by doing it. It is all based on my experience as a realtor and seeing firsthand that home preparation is the number one way to increase what a client will get for their house. I spent $3000 staging my own house and Colin from our team spent over $2000 staging his home for sale. There is a reason we invested in this process.
Pandemic Fatigue
Anyone else feel that they need the world to go back to normal ASAP? In many ways, this Fall is hopefully going to bring some normalcy with kids back in school. For me as a business owner, team leader, realtor, friend, and most importantly father and husband it has been so difficult to feel like I am succeeding at any one of these important tasks. I feel like I’m doing OK but just not flourishing if you know what I mean. In many ways, I need to relearn the good habits that I had in place before covid started. Also, anyone else dressing a lot more casually? Lulu dress pants are now my go-to!
Current Favourites
The best snack mix going right now is the Cajun mix at Farm Boy, another favorite is Farm Boy’s chocolate-covered pretzels. A close second are Miss Vickie’s Spicy Dill Pickle chips. Anyone one else developing a snacking habit? We have snack-a-palooza’s at least twice a week.
Recent Reads
Right now, I am reading Greenlights by Mathew McConaughey. Good life story. It is funny and interesting. Alright, Alright, Alright!
Also, reading The Song of Achilles. So far so good.
Best of TV
Right now the best thing on TV are the Blue Jays! Loving the streak and playoff push.
This Fall will be an interesting real estate market to monitor in Ottawa. I think it will be very active but prices will continue to stabilize. I am already feeling a shift. Showing activity is down and buyers are not quite as willing to pay a premium price on some listings. They are starting to get more patient or are just burnt out from the year that was. It is important to understand that buying a home within set criteria is no easy feat right now.
August has brought us even more stabilization to the market and offering a bit more of an increase in housing stock at 1.5 months of inventory. This is still categorized as a seller’s market, as a balanced market is defined as 4-6.5 months’ worth of inventory. August’s inventory is approximately 5-6% higher than last year for both residential and condominium property classes.
The latest stats from the Ottawa Real Estate Board show a sharp decrease in sales compared to last year’s numbers due to the first wave lockdown in Spring 2020, which shifted 2020’s usual Spring market to the Summer and Fall months. However, August 2021 numbers are on par with August 2017 and 2018.
Last month there were 1,175 residential properties sold, compare that to 1,568 in August 2020, a decrease of 25%. Condominium-property class sales were 397, a decrease of 9% from August 2020. The five-year average for total unit sales in August is 1,684.
Year-to-date resales are at 14,728 and are 24% higher than this period in 2020, indicating Ottawa’s market is currently in another strong year.
August’s average sale price for a condominium-class property was $407,148, an increase of 6% from last year, while the average sale price for a residential-class property was $674,449, an increase of 14% from a year ago.
With year-to-date average sale prices at $722,526 for residential and $420,654 for condominiums, these values represent a 27% and 18% increase over 2020, respectively.
“Supply continues to remain scarce, and that is the driving factor behind these price increases. New listings were down 400 units from July and 500 units from last August and below the 5-year average for the first time this year since February.” states Ottawa Real Estate Board President Debra Wright.
“We are pleased to see that housing affordability and the supply shortage have been a predominant part of election conversations and federal party platform pledges – which is a step in the right direction. We look forward to the collaboration between municipal, provincial, and federal governments to establish measures which will effectively address these fundamental barriers to homeownership for all Canadians who desire to own a home.” Debra adds.
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!
