Newsletter

Resale Market Stabilizes in February with a Glimmer of Hope for Buyers and Sellers Alike!

Members of the Ottawa Real Estate Board (OREB) sold 855 residential properties in February through the Board’s Multiple Listing Service® (MLS®) System, compared with 1,411 in February 2022, a decrease of 39%. February’s sales included 633 in the freehold-property class, down 42% from a year ago, and 222 in the condominium-property category, a decrease of 31% from February 2022. The five-year average for total unit sales in February is 1,157.

“We’re going to see declines in transactions and prices when we compare current figures to last February — the height of the pandemic resale market activity,” says Ottawa Real Estate Board’s President Ken Dekker. “On the other hand, with the Bank of Canada holding interest rates steady, prospective buyers have more budget certainty to work with as we head into the spring market.”

By the Numbers – Average Prices*:

• The average sale price for a freehold-class property in February was $708,968, a decrease of 15% from 2022. However, it marks a 5% increase over January 2023.

• The average sale price for a condominium-class property was $410,927, decreasing 12% from a year ago.

• With year-to-date average sale prices at $695,086 for freeholds and $411,449 for condos, these values represent a 14% decrease over 2022 for freehold-class properties and a 10% decrease for condominium-class properties.

“The average price increase for freeholds over January could be an indicator that buyers have normalized to the current interest rates. And perhaps, it’s a glimmer of more activity to come in the months ahead.”

By the Numbers – Inventory & New Listings:

• Months of Inventory for the freehold-class properties has increased to 2.8 months from 0.7 months in February 2022.

• Months of Inventory for condominium-class properties has increased to 2.5 months from 0.7 months in February 2022.

• February’s new listings (1,366) were 22% lower than February 2022 (1,762) and up 3% from January 2023 (1,323). The 5-year average for new listings in February is 1,632.

• Days on market (DOM) for freeholds decreased from 43 to 37 days and 47 to 43 days for condos compared to last month.

“A decrease in the days on market, paired with fewer new listings entering the market, is good news for sellers,” says Dekker. “However, if that trend continues to impact our supply stock and we don’t get more inventory, our otherwise balanced market could swing back into seller’s territory — but it’s too early to predict.”

“The best advice for sellers and buyers in today’s market is to pay close attention to the comparison and competition insights only a REALTOR® can offer. Ottawa is made up of many micro-markets, and neighbourhood-level data is vital to standing out and closing deals.”

REALTORS® also help with finding rentals and vetting potential tenants. Since the beginning of the year, OREB Members have assisted clients with renting 995 properties compared to 800 last year at this time, an increase of 24%.

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.

Royal LePage forecast adjusted downward: National aggregate home price set to end year modestly below 2021 following third quarter price declines in majority of Canadian markets

According to the Royal LePage House Price Survey released last month, the aggregate price of a home in Canada increased 3.3 % year-over-year to $774,900 in the third quarter of 2022.On a quarterly basis, the aggregate price of a home in Canada decreased 4.9 %; the second consecutive quarterly decline recorded.

“September did not bring the typical seasonal lift in the number of homes trading hands in this country, a clear indication that our housing market continues to adjust to higher borrowing costs,” said Phil Soper,president and CEO of Royal LePage. “Home prices follow sales volume trends,which means we will see further softening in the final months of the year. Our revised outlook has national prices at just below where we ended 2021, erasing the gains made in the first quarter of 2022.”

The aggregate price of a home in Ottawa increased 2.7 % year-over-year to $744,500 in the third quarter of 2022.On a quarterly basis, the aggregate price of a home in Ottawa decreased 7.0 per cent; the second consecutive quarterly decline recorded.

“Despite softening home prices over the summer,Ottawa's fall real estate market is trending towards more stable conditions as new inventory becomes available.We continue to see strong buyer demand in the region – even if lower than last year's historical highs – and not enough supply to fully shift to a balanced market,” said Jason Ralph, broker of record, Royal LePage Team Realty. “Despite rising interest rates, many buyers are still keen to make a purchase this year.And,without a significant boost in inventory, it is unlikely we will see a full return to a balanced market.”

Ralph noted that interest rate hikes and inflation have eased competition. However, properties in the most desirable neighbourhoods, if priced properly, can still produce multiple-offer scenarios.

“Although demand remains strong in parts of the region, buyers today are able to be more selective with their purchases and have the opportunity to place conditions in their offers.Those who are in a position to buy feel the pressure to transact before lending rates rise any further.”

Ralph expects healthy market activity in Ottawa for the remainder of the year and anticipates a shift back to pre-pandemic seasonal trends in 2023, as low supply continues to be a challenge

Resale Market’s Adjustment and Correction Continues

Members of the Ottawa Real Estate Board (OREB) sold 987 residential properties in October 2022 compared with 1,670 in October 2021, a decrease of 41%.

“After the volatility of the past two pandemic years, which was unsustainable, the market is correcting and adjusting,”says OREB's President. “The slowdown is compounded by Bank of Canada interest rate increases, which further exacerbates buyer hesitancy and weakens people’s purchasing power—especially first-time homebuyers.”

“Demand is still high, and with increasing inventory available, Buyers have more choices and time to shop for their new home. However, the ongoing speculation about where prices and interest rates are headed shakes consumer confidence and has made some prospective Buyers take a waitand-see approach.”

“Sellers may be understandably concerned about market fluctuations, which have been more drastic lately. As with any major investment, a longerterm perspective is important. The significant year-over-year gains of the last two years were not sustainable. If you have owned your property for any length of time, your equity has increased significantly and will buffer price corrections. If you buy and sell in the same market, it is all relative.”

The average sale price of a residentialclass property sold in October in the Ottawa area was $677,873, a decrease of 5% from a year ago. The average sale price for a condominium-class property was $445,691 an increase of 9% from October 2021.