Ottawa Real Estate Market Stays Steady in the Home Stretch of 2018

Home sales in Ottawa were sizzling throughout the summer, and the real estate market remains steady going into the fall, with a continuing low inventory of properties for sale and interest rates in a holding pattern.

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Ottawa Real Estate Board members sold 1,586 residential properties in August through the board’s Multiple Listing Service, compared with 1,535 in August 2017— an increase of 3.3 per cent. The five-year average for August sales is 1,417.

“We had a very good summer in the real estate board residentially and in the condo sector,” observes Patrick Morris. “We’ve noticed a pretty consistent distribution of the style of homes sold, as far as residential properties go.

“A lot of buyers and agents have had the perception that most of the market is in the town house price range, and that’s a yes and a no. The number of town homes that have sold year-to-date in 2018 represents the same proportion of town homes sold last year over the same period. This year, perception is not reality.” The situation is similar for semi-detached homes and detached homes, he adds. “Detached homes last year represented about two-thirds of the total number of residential properties sold. The same applies this year.”

While the number of residential property sales during the month of August didn’t change much from 2017 to 2018, the number of condo sales jumped 10.9 per cent, to 398.Market_Highlights_Chart.JPG

Overall, the condo market is faring much better than it has over the past few years, but is not completely out of the woods, says Patrick. “Year to date, the number of condo sales is up 15.5 per cent in 2018 compared with last year. When you’ve had such an increase in the number of sales, one would expect that the average price would rise proportionally. It hasn’t. The average condo price has only increased 1.8 per cent.”

On the other hand, the number of residential home sales year to date increased marginally by 0.6 per cent, but the average price increased five per cent, to $447,176. “The $300,000 to $500,000 price range continues to be very popular,” notes Patrick. “It’s the most affordable price range, and it represents about half of total sales. It’s huge in the residential market.”

Within the condo market, the most active price range this summer was between $175,000 and $274,900, accounting for around half of all sales.

Property listings in both the condo and residential sectors are taking less time to sell this year than last. The absorption rate identifies how long it would take for all current listings to be absorbed in the market, i.e., how many months it would take to sell all listings if no new ones entered the market. The average number of days to sell residential properties this year is around two months—about 19 per cent lower than last year.

In the condo sector, the absorption rate dropped 31 per cent year to date. “But it’s still taking 71 days, on average, to sell any condo in Ottawa,” comments Patrick. He adds that it’s a common misconception in this active market that properties are selling within days. “The time it takes to sell depends on the neighbourhood, and the situation can even change from block to block.”

One caveat for the coming months is that the housing inventory continues to be low. “I think this trend is unfortunately going to continue for the next little while, until the condo builders decide to start to build a lot of the projects that have been put on hold over the last several years.” 

 

TECTONIC SHIFT COMING: More than 1.4 million baby boomers across Canada plan to buy a home in the next five years

The Royal LePage Boomer Trends Survey released in August found that nearly a fifth of Canada’s 8 million baby boomers (born between 1946 and 1964) are planning to buy a new home in the next five years.

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"Baby boomers will impact Canada’s housing market in a big way in the coming years, as 1.4 million are expected to sell and buy real estate between now and 2023,” said Phil Soper, president and CEO of Royal LePage. “While the wave of older consumers will increase competition for condominium property in particular, there is no single type of home that boomers will be investing in.”

Research firm Leger surveyed 1,000 Canadians aged 54 to 72. When asked about plans nearing or during retirement, one in five (20 per cent) boomers said they intend to buy a new property. More than half of the boomers surveyed consider their local housing market unaffordable for retirement (given recent price increases in several Canadian markets), and are choosing to renovate their current homes instead of buying a new place.

According to the survey, 77 per cent of boomers across Canada own a home. More than half of those home owners live in a detached home, while 21 per cent live in condominiums, and 12 per cent live in semi-detached/town homes.

Of boomer respondents who were planning to buy a home in the next five years: 45 per cent are most likely to purchase a detached home; 32 per cent are most likely to buy a condominium; 10 per cent noted strongest interest in a semi-detached/town home; and five per cent were most interested in a recreational property.

Respondents across Canada reported mixed feelings about downsizing, with 41 per cent saying they would seek a smaller home in retirement; just over half of respondents said they have no intention of downsizing.

With the rapid appreciation of home prices in Ontario, boomers in that province are the most likely to consider downsizing as they approach retirement; almost half (49 per cent) of all respondents said they plan to do so.

Ontario boomers are also the most likely to consider changing cities as they look for a home they can afford. Forty per cent of respondents said they are willing to move to a new city or suburb where homes are more affordable—the highest provincial rate in the country.

While most boomers in Ontario would prefer to remain in a detached home when downsizing, many are open to condominium living. Forty-six per cent of respondents said they would consider a condominium for their next home purchase, compared with the national figure of 32 per cent.

Overall, a large segment of Canada’s boomer population is on a strong financial footing, and either mortgage-free or on a clear path to becoming so. Three-quarters of survey respondents who own a home have paid off more than half of their mortgage, and 61 per cent have paid off more than 90 per cent.

If they were to buy property, 54 per cent of respondents stated having a budget of under $450,000, while 25 per cent said they would have a budget of $450,000 or higher.

Many boomers are willing to help their children buy a home. Almost half of survey respondents said they would subsidize their child’s purchase to some degree.

“Baby boomers are the most affluent generation in Canadian history, yet the journey has not been without challenge and adversity. Through several difficult economic recessions, the equity in their homes has proven to be wealth bedrock. This is a generation that deeply values home ownership and very much wants their children to have the same opportunity,” concluded Royal LePage CEO Soper. 

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   Patrick Morris                Rob Kearns 
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