Ottawa's real estate market picked up some sizzle in the first part of the summer--with the second-highest July sales on record--putting the market back on track for a healthy 2014.
Ottawa’s real estate market picked up some sizzle in the first part of the summer—with the second-highest July sales on record—putting the market back on track for a healthy 2014.
While the market got off to a slow start this year, July made up for the lag. “It’s a nice, stable market,” observes Patrick Morris, noting that July sales were up 8.2 per cent over last year’s.
Members of the Ottawa Real Estate Board (OREB) sold 1,445 residential properties in July through the Board’s Multiple Listings Service (MLS). Only July 2009 had more sales, with 1,578 properties sold in the residential and condominium classes.
Why the sudden increase in sales?
“I think there had just been a lot of people sitting on their hands, waiting to make a decision,” says Patrick. “The price range of $300,000 to $450,000 represented over 50 per cent of all of our sales. That’s a very popular, friendly price range. People can afford that.”
OREB President Randy Oickle adds, “The price range of $300,000 to $349,999 had the highest concentration of properties sold, followed by the $350,000 to $399,999 range, then the $400,000 to $449,999 range. These numbers are indicative of first-time homebuyers still coming into the market, taking advantage of the continuing low interest rates.”
The average price of residential properties (including condos) sold in July in Ottawa was $356,735. The average sale price for a condominium-class property was $261,663, a decrease of 5.3 per cent over July 2013; the average sale price of a residential-class property was $377,791, a decrease of 0.8 per cent over July 2013.
Patrick notes that this decrease is not an aberration. “We expected this. We’ve been predicting all along this year that the market will be relatively flat, like a revenue-neutral increase. One month, you could have a decrease, and another you could have an increase.”
By far the most home sales have been in the residential class, accounting for 1,183 of the 1,445 properties sold in July.
By comparison, only 262 condos were sold. “The most disadvantaged part of the market is the condos. It’s very slow,” comments Patrick. There are a lot of condo units for sale, and buyers are not feeling a sense of urgency, whether due to the ample inventory or the fact that interest rates remain favourable.
“It’s going to take a while for the condo market to recover,” says Patrick. “Patience is the operative word here, and it has to apply to the residential sector as well.”
*The OREB cautions that average sale price information can be useful in establishing trends over time, but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.
It all depends on your specific location on your street, and on the neighbourhood in general. If you love your house, the block you’re in, and the neighbours—and you can afford the stress and financial investment of renovating—go for it.
Fifty to 60 per cent of people would rather stay put and renovate, but it’s more stressful than selling and buying, no question.
Number one, renovating is frequently more expensive than moving. There’s always cost overruns; the average is 25 per cent. Very few contractors are within budget. It’s not primarily the contractor’s fault—stuff happens. It could be structural issues—e.g., the contractor didn’t know there was an issue in the wall and had to redirect a heating duct and cold air return—or availability of the materials, or a change of heart by the homeowner. Make sure you get a couple of quotes from reliable contractors in writing, and ensure that all the elements are covered, including design work, electrical work, plumbing, finishings, etc.
Number two, bear in mind there’s a lot of disruption— not everybody is cut out for living through a renovation. It’s a mess. You’re living with contractors day in and day out for weeks or months—sometimes up to a year or two. Owners often have to move out and rent somewhere.
There’s going to be stress whether you move or remodel. If you do choose to remodel, you should always make your renovation as mainstream as possible, because you never know…your circumstances could change and you may need to move sooner than you expected.
Too many people personalize their renovation, and they don’t recoup their costs.* You can always personalize paint and light fixture choices, but I’ve seen some additions where I just shake my head and say, “Why didn’t you call me before?”
People who choose to renovate may recoup their costs in 10 or 20 years, but if you’re trying to recoup within five or 10 years, you may be better off moving. To get an idea of whether your home improvements will pay off when you need to sell, there’s a simple formula: add the renovating costs to the value of your home. If that figure is more than 10 per cent higher than the average value of homes in your neighborhood, you are unlikely to recoup your costs, as you are “over-improving.” Buyers are unlikely to be keen to buy the most expensive house on the block if they can buy a home for a similar price in a neighbourhood with higher-priced properties.
If you do choose to move, look for a property that has the right layout, the right location and, of course, nice neighbours!
* A good source of information is the National Association of Realtors’ remodeling magazine, which produces an annual list assessing how much value you can retain from 35 remodelling projects, such as adding central air conditioning or renovating the kitchen. Visit http://www.remodeling.hw.net/cost-vs-value/2014/trends for an overview.