As a new decade begins, the trend of strong demand and low inventory looks set to continue, making for an active market, albeit a more challenging one for buyers.
“2019 was a very busy year for realtors, buyers, and sellers,” observes Patrick Morris. “Both residential and condo housing sectors enjoyed a tremendous year in Ottawa, ending a decade that witnessed federal government layoffs at the beginning, fluctuating mortgage rates, changes to mortgage qualification rules, shifts in market inventory from high to low, and demand for properties moving Ottawa from a balanced market to a seller’s market.”
Members of the Ottawa Real Estate Board sold 761 residential properties in December 2019, compared with 660 in December 2018— an increase of 15.3 per cent. The number of December condo sales went up 18.8 per cent year over year, with 227 units being sold. These are record highs.
Prices also took off in 2019 after a decade of relatively steady increases. The average residential price climbed 8.9 per cent in 2019 over the previous year, to $486,590, while the average condo price rose 9.3 per cent, to $304, 203. The Ottawa Real Estate Board cautions that average sale price can be useful to look at overall trends but should not be used to establish whether specific properties have gone up or down in value—that all depends on prices and conditions within neighbourhoods.
Rob Kearns of the Morris Home Team notes, “Ottawa’s buyers have purchasing power, and interest rates are still very low, but competition and an appreciating market have led to frustration and disappointment for many. The closer you get to Ottawa’s average price of $486,590, the harder it is to find a home in this seller’s market.”
He adds, “Using a home’s list price and conventional comparative analysis does not always result in a successful purchase. Predicting prices has become harder and harder. But buyers with motivation, decisiveness, and advice from an experienced agent are successfully acquiring properties.”
The most active price point for residential sales continues to be the $300,000 to $499,999 range, representing 50.7 per cent of houses sold in Ottawa. Nearly 30 per cent of residential sales were in the $500,000 to $749,999 range. The higher end of the market—properties over $750,000—represented just 8.9 per cent of all residential sales in 2019. “That said, we are seeing substantial increases in the number of properties sold in the higher ranges,” says Rob.
Within the condo market, 62 per cent of all units sold in 2019 were between $200,000 and $349,999. “Condo prices are up because inventory is lower than it has been in years, and demand is very strong,” says Rob. “The tight condo market is affecting residential inventory because it has become tougher to downsize.” He adds that the luxury rental market may help loosen up the market by giving downsizers more options.
On a brighter note, while the low supply of available properties means that some potential move-up sellers are staying put, “We are through the toughest time in terms of inventory,” says Rob. “It is competitive out there, but we should see more choice for the next little while. Inventory tends to build from this time of year until May.”
Successful buyers will recognize the need to adjust their expectations, he adds. “It is important to understand that, while a balanced market is better for everyone, the next balanced market in Ottawa will happen at a higher price point. Prices here tend to stick, and it will take a shock to the market for them to decrease significantly. While inventory levels may rise this year, demand should continue to push the average price higher.”
Patrick Morris notes, “Ottawa’s real estate market weathered many twists and turns over the past year and decade. No one in January 2010 would have expected the average price for a residential property to increase from $338,244 to $486,590 in 2019. No one can forecast the future. The only certainty is change.”
Fortunately, interest rates are low, Ottawa’s economy and the local job market have been strong, and the high-tech sector continues to grow, all of which bodes well for Canada’s capital as 2020 rolls on. Ottawa remains one of the most affordable and sustainable housing markets in the country.