MORRIS MarketWatch Newsletter September 2013

Morris Home Team - MORRIS MarketWatch Newsletter September 2013

Ottawa, September 2013 : OTTAWA Real Estate Market Update

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RESIDENTIAL OVERVIEW:

In reviewing the official results for the first eight months of the year, we see that the residential sector decreased 4.5 per cent in the number of MLS properties sold compared to the same period in 2012.

Conversely, the number of sales in July this year was comparable to July 2012, and sales in August rose 5.9 per cent compared to August 2012.

fallcurbappeal_000.jpgTo date in 2013, the vast majority of homes sold in the under $500,000range representing 83.1 per cent of total residential sales. However, sales in the over $1 million range still represented only a fraction (0.9 per cent) of the total.

The $500,000 to $600,000 segment made up 8.2 percent of sales, the $600,000 to $750,000 bracket contributed 5.3 per cent of sales, and 2.5 per cent of all the sales were in the $750,000 to $1 million range.

The total inventory of active residential listings as of August 31 is up nearly 6.2 per cent compared to the same period in 2012 and up 8.8 per cent as compared to 2011. Consequently, the higher inventory continues to give buyers a better selection of properties.

CONDO OVERVIEW:

The number of condo sales on MLS from January to end of August 2013 was 7.1 per cent less than the same period in 2012. However, it is important to note that for the month of August sales climbed 8.4 per cent over the same month last year. This is the first time that sales for the month have been greater than the same month in the preceding year. This slight increase in number of sales is encouraging however, the condo inventory of active listings continues to increase making this a buyer’s market.

The number of active condo listings as of August 31, 2013 increased by 19.7 per cent compared to the same period last year. Many condo sellers are concerned since inventory is now 39.1 per cent higher than it was in August 2011.

The majority of condo sales in August 2013 were under $300,000 which represented 76.4 per cent of the total number of sales. The next highest percentage was in the $300,000 to $500,000 price range representing 19.4 per cent of sales and the $500,000 to $600,000 range saw just a small fraction at only 2.3 per cent of the total. The over $600,000 price range accounted for only 1.9 per cent of total sales.

OF NOTE:

Federal Finance Minister Jim Flaherty has taken steps to reduce finance credit flow out of concern that Canada’s real estate market might negatively affect the national economy. He has publicly expressed concern that banks may be dropping mortgage rates too low. The steps Mr. Flaherty has taken have certainly contributed to the slowing in the housing market that we have seen this year to date.

On September 4, 2013 the Bank of Canada announced that they would maintain the overnight rate target at one per cent. The overnight rate is what banks typically use to borrow and lend from one another. Increases and decreases to this rate are usually followed by similar fluctuations to consumer mortgage rates. However, lenders may increase their rates in anticipation of an increase by the Bank of Canada.

SUMMARY:

The slight uptick in mortgage interest rates may create some extra buyer demand in September and October since buyers will want to close prior to their interest rate guarantee expiry date. Will the increase in mortgage interest rates have an impact on housing values? According to Patrick, “That remains to be seen. But, traditionally when interest rates rise, prices are affected. It certainly depends on the price range of the property.”

The recent small increase in sales in both the residential and condo markets is encouraging. We hope this is the beginning of a trend. It's too early to make a prediction but we'll be watching the September and October figures very closely. We'll keep you posted.

ASK PATRICK...

I hear people talking about a “buyer’s market” and a “seller’s market”, but I don’t really understand what these terms mean. Can you explain?

These terms can sound confusing if you’re unfamiliar with them, but they’re actually pretty straightforward. Simply put:

  • When there is high demand and low supply, we have a seller’s market.
  • And conversely, when there is high supply and low demand, we have a buyer’s market.

    Currently in Ottawa, in the lower price range of the housing market, we are seeing a balanced market, but there is still great supply and plenty of choice for the buyer. In the higher price range for properties, there is what we cannot-so-delicately refer to as a “massive supply,” which allows for wonderful choice and options for the buyer – and what we refer to as a buyer’s market.

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2013 Profile of Buyers' Home Feature Preferences

There are a variety of factors that influence the home a person buys, and those factors depend on who is doing the buying, according to a survey that was recently released by the National Association of Realtors.

The 2013 Profile of Buyers’ Home Feature Preferences takes an in-depth look at what influences people to make home purchases. Here are just a few of the findings:

Typical home
The typical recently purchased home was 1,860 square feet.

Aged to perfection
First-time buyers and single women tended to buy older homes.

On the level
Among buyers 55 and older, 42 per cent felt that finding a single-level home was ‘very important.’ Just 11 per cent of buyers under the age of 35 felt the same way. Single women placed a higher level of importance on single-level homes.

Brand new
Both single men and married couples placed greater importance on new kitchen appliances.

Added value
More than 75 percent (78 per cent, to be exact!) of all buyers purchased a home with a garage.

The two most common rooms buyers were willing to spend more for were a laundry room and a room that would serve as a den, study, home office or library.

Happy customers?
Stainless-steel-appliances-in-a-modern-bistro-kitchen.jpgAlthough 97 per cent of recent home buyers were satisfied with their purchase, there were always features that they would additionally like to have. According to the survey, most satisfied customers still said they would like to have larger closets and more storage space, as well as a larger kitchen. Two out of five said they would prefer a larger home overall.

Reno heaven

  • 53 per cent of buyers surveyed said that they had undertaken a home improvement project within three months of buying their home.
  • Remodelling the kitchen was the most common project, with 47 per cent of home improvers taking on this job.
  • Bathroom renos were a close second, with 44 per cent of those surveyed noting that they had undertaken a bathroom project.
  • 41 per cent of buyers who took on home improvements added or replaced lighting, and 37 per cent added or replaced appliances soon after purchasing their home.

House Prices Across the Country Source: Royal LePage Survey of Canadian House Prices - Average House Prices 2nd Quarter 2013

DETACHED BUNGALOW

STANDARD TWO STOREY

STANDARD CONDOMINIUM

MARKET

Q2 2013 Average $

% Change from Q2 2012

Q2 2013 Average $

% Change from Q2 2012

Q2 2013 Average $

% Change from Q2 2012

Halifax 288,667 1.0% 333,167 5.0% 215,950 5.1%
Charlottetown 173,000 0.6% 205,000 1.0% 128,000 0.8%
Moncton 153,000 6.3% 143,300 3.8% N/A N/A
Fredericton 207,000 1.0% 220,000 2.3% 158,000 0.6%
Saint John 177,828 1.6% 279,922 0.1% 158,068 0.0%
St. John's 290,000 5.2% 392,667 6.8% 309,333 7.5%
Montreal 288,868 2.7% 397,643 3.3% 240,306 1.6%
Ottawa 396,483 1.9% 398,983 1.8% 259,417 -0.1%
Toronto 577,495 3.1% 683,241 2.2% 366,189 0.7%
Hamilton 222,761 4.0% 294,928 2.8% N/A N/A
Winnipeg 305,010 0.6% 344,598 7.1% 198,431 4.4%
Regina 330,000 3.0% 363,000 4.5% 205,500 -1.1%
Saskatoon 369,250 5.2% 394,250 3.9% 255,000 -0.3%
Calgary 457,889 5.9% 453,789 6.7% 261,933 6.0%
Edmonton 347,344 5.9% 361,636 2.2% 204,755 1.9%
Vancouver 1,052,500 -3.2% 1,151,250 -2.3% 490,475 -3.3%
Victoria 453,100 -1.5% 461,000 0.0% 267,400 -4.5%
NATIONAL 386,547 2.7% 419,614 2.7% 248,750 1.2%
  • Average house prices are based on an average of all sub-markets examined in the area, except for the smaller markets of Charlottetown, Moncton, Fredericton, Saint John and Victoria.