Condo sales pick up slightly as Ottawa real estate market heads toward an active spring

A small ray of hope appeared in Ottawa’s challenging condo market over the first few months of 2016, while Ottawa’s real estate market continued to perform steadily overall.

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“The number of condo sales in the first quarter of 2016 rose 7.25 per cent compared with the first quarter of 2015, while the inventory of condos available for sale— which has been high—dropped by about 3.3 per cent,” notes Patrick Morris. “There was a respectable increase in the number of sales in January and February.” Condo sales account for about 20 per cent of total home sales in Ottawa (combining both residential and condominium properties).

As for residential properties, the number of sales in Ottawa declined over the first three months of 2016 by a marginal 2.3 per cent, while the inventory (number of homes for sale) decreased about five per cent over Q1 in 2015. “We witnessed moderate inventory declines in January and February, but the most notable descent was in March 2016. There were 403 fewer homes on the market in March—a decline of eight per cent—compared with the same month last year.

“The small decline in the number of sales and the drop in inventory did not have any impact on absorption rates (the rate at which homes are sold), which were similar for Q1 this year and last year,” says Patrick. The March 2016 absorption rate of 5.3 illustrates that it would take 5.3 months to sell all of the 5,052 homes for sale that month if 945 homes (the actual residential sales figure for March) sold every month.

“I checked the previous absorption rates for every March going back to 2013. There has been very little difference,” observes Patrick, adding, “CMHC has again forecasted that the Ottawa real estate market this year would perform at the same rate as in 2015. The sales trend to March 31, 2016, appears to confirm this, which means a stagnant but stable market.”Activity_at_a_glance_chart..JPG

The most popular price range for residential homes in March was $300,000 to $350,000, with nearly 30 per cent of all the listings in this segment selling. “This is a healthy ratio compared to the overall market,” says Patrick, “where 18.7 per cent of all listed homes are selling.”

As spring tries to break through in Ottawa, however, the real estate market appears to be heating up as well. “We’re getting a lot more inquiries on our listings now than we received last year at the same time,” notes Patrick. “That tells me we should have a very active April, May and June.” And, he adds, “Interest rates are still at a record historic low. This, along with the warmer weather around the corner, should motivate many buyers to make a decision.”  

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What does the phrase “all real estate is local” mean?

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Real estate is not national—it’s local. Much as the news headlines may blare about how the average Canadian house price is soaring, there isn’t a “Canadian” housing market. Given our country’s vast and diverse nature, real estate markets here are as localized as the weather.

Market conditions in our community are specific to us, and are not the same as those in other cities or regions. A number of factors affect the local real estate market, including job growth, business climate, and demographic trends (such as Boomers staying in their single-family dwellings, Millennials moving into urban areas, population changes, etc.).

Employment in Calgary, for example, has declined, so that has negatively affected the housing market there. Ottawa, however, has had a steady, stable market over the last several years. We’ve not had the great fluctuations up or down that Calgary has witnessed.

In Ottawa, buyers can benefit from housing prices that are much lower than in the other major centres in Canada, in particular Vancouver and Toronto.

When buying a home, it is best to find out what is going on around you at the city and neighbourhood levels. Just as you would want to get your weather from the local experts, the same is true for real estate. 

Tips for Every Condo Buyer

Condos are a great option for people who don’t want the hassle of maintaining a house. They are also ideal for those who are either downsizing or looking to break into the real estate market for the first time. Armed with the right information when buying, you can make choices that will help keep your condo marketable down the line. Here are some tips:

• Thoroughly research locations, and consider how the neighbourhood might be different between evening and daytime hours.
• Opt for the highest square footage you can afford. Smaller units are more difficult to resell.
• A great view will make your day-to-day living more enjoyable and impress future buyers.
• Think about parking; even if you don’t intend to use a parking space, you can always rent it out, and future buyers won’t be put off by a lack of parking.
• Look at storage; a locker is highly recommended, since storage in a condo usually comes at a premium.
• Find out if occupants of the building are primarily owners. A higher ratio of renters could make resale more difficult.

While the selection in the condo market is ample, there is plenty of opportunity to ensure the choices you make add up to a good investment.

Boomers, Millennials, and Real Estate Choices: Talkin’ About the Generations

couple-843489_1920.jpgSome interesting generational trends are happening in real estate at opposite ends of the spectrum.

Baby Boomers, who range in age from the mid-50s to early 70s, aren’t nearly ready to move into retirement homes. While some Boomers have begun downsizing from their single-family dwellings, particularly those in their late 60s, the biggest segment of the population doing so right now is in their mid-70s.

Although the Boomers are too active and too young to move into retirement homes, says Patrick Morris, “in Ottawa, we find we’re getting a good segment of the Boomers who do want to move into a one-level dwelling—either a condo, or a bungalow—or who simply want to rent.” Given that most Boomers are still in their 50s, it will be another decade or so before they play a role in flooding the market with single-family homes, as has been anticipated.

laptop-943559_1920.jpgOn the other hand, the Millennials— the first generation to grow up in the age of the Internet—are just getting on the real estate ladder. “They’re buying semi-detached town homes and small condos—entry-level homes,” explains Patrick. “They’re methodical and they’re online a lot, and that’s certainly evident in their search for homes. They represent the highest percentage of online inquiries that we get.”