The number of houses for sale in Ottawa isn’t enough to meet the demands of a city with a strong economy, low unemployment, and one of the highest median household incomes in the country—which is why bidding wars are becoming more common in popular areas and in affordable price ranges, and some homes are going for well above their asking price.
Members of the Ottawa Real Estate Board (OREB) sold 2,279 homes in May this year, compared with 2,294 in May 2017—a decrease of 0.7 per cent. However, the number of condos sold increased from 444 in May 2017 to 485 in May 2018.
“The really good news is that condo sales continue to increase, which means there’s a rebound,” says Patrick. “We’ve had a few consecutive months of increases in the sales numbers. To the end of April 2018, prices were flat, but in May we saw a small increase.” Although the condo market is not back to where it should be after several years in the doldrums, adds Patrick, “at least we’re making gains. We’re on the right track.”
In both the residential and condo sectors, it is taking less time for listings to sell this year than last year. 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 listings entered the market. In the residential sector, it would take 1.8 months to sell all the 3,174 active properties in May 2018; it would have taken 2.2 months during May 2017. In the condo sector, the drop was more pronounced. In May 2017, it would have taken 3.4 months to sell the 1,491 condos available for sale. In May 2018, it would take only 2.4 months to sell the available inventory.
The most active price point for residential property sales continues to be between $300,000 and $499,999, representing nearly half of residential property sales in May, while the $500,000 to $750,000 range gained momentum, accounting for almost a quarter of sales in the same category.
Forty nine per cent of condos sold were in the $150,000 to $249,999 range, and half of those were for apartment condos—possibly a reflection of the low vacancy rate for rental properties in Ottawa. OREB president Ralph Shaw noted that, if buyers can put together a down payment, “the carrying costs of one of these condos should be less than renting.”
Patrick observes that, even though prices have gone up considerably in some areas in Ottawa, “overall, it’s still a healthy market for first-time buyers.” The new mortgage stress test that has been in place in Canada since the start of 2018 has had a negative impact on some buyers, he notes, “but we’ve noticed that some first-time buyers are leaning on family to help them with more of a down payment so they can meet the stress test approval.”
The low inventory of houses for sale in Ottawa is likely to keep upward pressure on house prices through the summer, but the city remains an affordable and attractive place to buy a home.
As for how the Ottawa market will do for the rest of the year, that depends on geopolitical factors such as interest rates and how the trade relationship with the U.S., our chief trading partner, will play out.
“The Bank of Canada is forecasting a potential interest rate increase. We hope that, if there is one, it won’t have a major impact,” says Patrick.
If things remain constant, he adds, “We should see a good, steady market for the rest of this year in both residential and condo sectors. Both sectors are healthy, and this bodes well for other industries, including the Home Depots and Ronas of the world. There’s a ripple effect that really helps the economy, which is great for the local market.”