Resale Market Starts Slow as Buyers Remain Cautious
Members of the Ottawa Real Estate Board (OREB) sold 606 residential properties in January through the Board’s Multiple Listing Service® (MLS®) System, compared with 933 in January 2022, a decrease of 35%. January’s sales included 460 in the freehold-property class, down 30% from a year ago, and 146 in the condominium-property category, a decrease of 47% from January 2022. The five-year average for total unit sales in January is 819.
“January’s marked slow down in unit sales over 2022 indicates potential home buyers are taking their time,” says OREB President Ken Dekker. “While last month saw the culmination of the succession of interest rate hikes announced by the Bank of Canada, affordability remains a factor. They may be waiting for a shift in listing prices. They’re being cautious in uncertain conditions.”
By the Numbers – Average Prices*:
The average sale price for a condominium-class property in January was $412,244, a decrease of 8% from 2022.
The average sale price for a freehold-class property was $676,272, decreasing 12% from a year ago.
“Despite the decrease in average prices, the market should not be considered on a downward slide,” says Dekker. “A hyper COVID-19 seller’s market is now leveling out to our current balanced market state.”
“On a positive note, in comparison to December’s figures, January’s average price of freehold properties increased by 3%. The average price of condos did fall by 5% compared to December but condo pricing tends to fluctuate more due to the small data set.”
By the Numbers – Inventory & New Listings:
Months of Inventory for the freehold-class properties has increased to 3.8 months from 0.9 months in January 2022.
Months of Inventory for condominium-class properties has increased to 3.8 months from 0.8 months in January 2022.
January’s new listings (1,324) were 16% higher than 2022 (1,142) and up 89% from December 2022 (699). The 5-year average for new listings in January is 1,233.
“Ottawa’s inventory and days on market figures are typical for a balanced market and another sign that buyers are no longer racing to put in an offer,” says Dekker. “The increase in new listings and supply is a boon for home buyers, who now have more selection and the ability to put in conditions at a less frantic pace. REALTORS® are an essential resource in finding the right property for the right buyer. On the other side of the transaction, REALTORS® can help sellers with hyper-local insights about how to sell in their neighbourhood at a time when pricing is key.”
More people are turning to REALTORS® for help renting properties — 509 this month compared to 410 in January 2022, an increase of 24%. “Even with the increase in housing stock, the tighter rental market is another indication that affordability is keeping some potential buyers on the sidelines.”
Foreign Buyer Ban
Canada's foreign homebuyer ban went into effect on January 1st, 2023, and will remain in place for two years. Housing affordability remains a concern for Canadians and interest rates are still rising. Those with variable-rate mortgages are paying hundreds more per month and those with fixed-rate mortgages who have yet to renew are terrified of rising interest rates.
The foreign buyer ban is put in place to prevent foreign buyers from buying large amounts of properties to use as investment homes.The ban will increase number of homes on the market and gradually helping to decrease the price of homes. According to the Parliamentary Budget Office, the average cost of a home is 67 per cent more than what the average Canadian household can afford.
Which properties are included in the ban?
The Prohibition on the Purchase of Residential Property by Non-Canadians Act states that all residential properties including detached homes or similar buildings, semi-detached houses, rowhouse units, residential condominium units and other similar premises.
The legislation applies to residential properties located in an area with a total population of at least 100,000 people with at least 50,000 living in its core (known as a census metropolitan area) and an area with a core population of at least 10,000 people (known as a census agglomeration).
Who is exempt from the ban?
There are some exceptions to the ban, including, those in Canada with temporary work permits, refugee claimants and international students who meet certain criteria.The ban does not apply to those who are Canadian citizens or permanent residents, and it also does not apply to non-Canadians looking to rent a residential property in Canada.
Non-Canadians with a spouse or common-law partner who is a Canadian citizen, permanent resident, person registered under the Indian Act or refugee are also exempt.
Those who are in violation of the ban can be fined up to $10,000 and may be required to sell the property they purchased.Those who knowingly assist a non-Canadian with their purchase can also be fined.