Ottawa Real Estate Market Update

Members of the Ottawa Real Estate Board (OREB) sold 601 residential properties in December through the Board’s Multiple Listing Service® (MLS®) System, compared with 857 in December 2021, a decrease of 30%. December’s sales included 466 in the residential-property class, down 22% from a year ago, and 135 in the condominium-property category, a decrease of 48% from December 2021. The five-year average for total unit sales in December is 775.

Residential and condo resales in 2022 totaled 15,288, compared with 20,289 in 2021, decreasing 25%. Total sales volume in 2022 was approximately $10.5B compared to $13B in 2021.

“Even with the normal seasonal slowdown, December’s performance was in stark contrast to the very active resale market that opened 2022,” says Ken Dekker, OREB’s newly installed 2023 President. “As interest rates and inflation both climbed, buyers retreated to the sidelines and began taking a wait and see approach. However, while it’s quieter than the frantic pace we experienced in 2021, it is now a balanced market.”

By the Numbers – Average Prices*:

• The average sale price for a condominium-class property in December was $434,973, an increase of 9% from 2021.

• The average sale price for a residential-class property was $655,839, decreasing 7% from a year ago.

• With year-to-date average sale prices at $769,623 for residential units and $453,770 for condominiums, these values represent a 7% increase over 2021 for residential-class properties and an 8% increase for condominium-class properties.

“Although market activity tapered off in later 2022, there was an immense amount of activity in the spring at high prices,” says Dekker. “This will be an important caveat to consider as we begin comparing 2023 numbers to the previous year.”

By the Numbers – Inventory & New Listings:

• Months of Inventory for the residential-class properties has increased to 3.7 months from 0.9 months in December 2021.

• Months of Inventory for condominium-class properties has increased to 3.9 months from 0.9 months in December 2021.

• December’s new listings (699) were 17% higher than 2021 (600) and down 56% from November 2022 (1,598). The 5-year average for new listings in December is 662.

“The leading economic force behind Ottawa’s rapid appreciation in the past five years is chronic supply insufficiency,” says Dekker. “It intensified during the pandemic as prospective purchasers capitalized on incredibly low interest rates. Today’s higher rates are slowing down building projects, which exacerbates the low supply issue.”

“Since Ottawa is made up of hyper-local markets, it is a difficult ecosystem to forecast,” says Dekker. “Plus, there are a multitude of factors influencing a changing economic environment these days that will dictate how much activity the resale market will see in 2023. REALTORS® have access to expert insights and industry resources that can help buyers and sellers navigate the complexities.”

REALTORS® also help with finding rentals and vetting potential tenants. OREB Members have assisted clients with renting 6,105 properties this past year compared to 4,813 in 2021.

(SOURCE: OREB)

Members of the Ottawa Real Estate Board (OREB) sold 846 residential properties in November through the Board’s Multiple Listing Service® (MLS®) System, compared with 1,456 in November 2021, a decrease of 42%. November’s sales included 658 in the residential-property class, down 39% from a year ago, and 188 in the condominium-property category, a decrease of 50% from November 2021. The five-year average for total unit sales in November is 1,270.

“November’s sales were expectedly low given the typical slowdown this time of year but they also reflect today’s economic conditions,” says Penny Torontow, OREB’s 2022 President. “This is not isolated to our local market. Globally, we’re still adjusting to the post-pandemic world and that affects demand, pricing, interest rates, cost of living, supply chain disruptions and more. As a result, those who can, are waiting and watching.”

By the Numbers – Average Prices*:

• The average sale price for a condominium-class property in November was $415,533, a decrease of 4% from 2021.

• The average sale price for a residential-class property was $680,031, decreasing 5% from a year ago.

• With year-to-date average sale prices at $774,422 for residential units and $454,436 for condominiums, these values represent an 8% increase over 2021 for both property classes.

“What’s concerning about the current market is the impact on first-time homebuyers,” says Torontow. “The marked decrease in condo sales, for example, signals that even entry-level properties are being affected. Fluctuating markets, paired with the stress test, are keeping first-time buyers on the sidelines in a tight rental market—with MLS® rentals increasing 27% this year over last.”

By the Numbers – Inventory & New Listings:

• Months of Inventory for the residential-class properties has increased to 3.5 months from 0.9 months in 2021.

• Months of Inventory for condominium-class properties has increased to 3.4 months from 1.1 months in 2021.

• November’s new listings (1,598) were 12% higher than 2021 (1,429) and down 22% from October 2022 (2,046). The 5-year average for new listings in November is 1,398.

“With nearly four months of inventory and an average 30 days on market, Ottawa now has a balanced resale market, slightly tipping toward the buyers,” says Torontow. “Sellers are well-advised to work with a REALTOR® who has hyper-local knowledge about specific neighbourhoods, appropriate price points and ideal timing. Prices are adjusting but real estate is a long-term investment. It’s the same reason I tell buyers to marry the house and date the rate.”

(SOURCE: OREB)

Members of the Ottawa Real Estate Board sold 987 residential properties in October through the Board’s Multiple Listing Service® (MLS®) System, compared with 1,670 in October 2021, a decrease of 41%. October’s sales included 758 in the residential-property class, down 40% from a year ago, and 229 in the condominium-property category, a decrease of 44% from October 2021. The five-year average for total unit sales in October is 1,554.

“After the volatility of the past two pandemic years, which was unsustainable, the market is correcting and adjusting,” says Penny Torontow, Ottawa Real Estate Board 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 wait-and-see approach.”

“Sellers may be understandably concerned about market fluctuations, which have been more drastic lately,” she adds. “As with any major investment, a longer-term 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.”

By the Numbers – Inventory & New Listings:

• Months of Inventory for the residential-class properties has increased to 3.3 months from 1 month in 2021.

• Months of Inventory for condominium-class properties has increased to 3 months from 1.2 months in 2021.

• October’s new listings (2,047) were 4% higher than 2021 (1,960) and down 14% from September 2022 (2,371). The 5-year average for new listings in October is 1,971.

“Buyers and Sellers need to carefully analyze their own unique circumstances. No one can predict with absolute certainty what will happen next year, but in the highly employed and stable Ottawa market, real estate has been and continues to be a good investment over time,” says Torontow. “They don’t have a crystal ball, but mortgage brokers and REALTORS® have the education, expertise—and most importantly, the data—to help people make an informed decision for their specific situation.”

By the Numbers – Average Prices*:

• The average sale price for a condominium-class property in October was $445,691, an increase of 9% from 2021.

• The average sale price for a residential-class property was $677,873, decreasing 5% from a year ago.

• With year-to-date average sale prices at $780,390 for residential units and $456,470 for condominiums, these values represent an 8% increase over 2021 for residential-class properties and a 9% increase for condominium-class properties.

REALTORS® also help with finding rentals and vetting potential tenants. Since the beginning of the year, OREB Members have assisted clients with renting 5,186 properties compared to 4,012 last year at this time.

(SOURCE: OREB)

Members of the Ottawa Real Estate Board sold 1,080 residential properties in September through the Board’s Multiple Listing Service® System, compared with 1,601 in September 2021, a decrease of 33%. September’s sales included 816 in the residential-property class, down 34% from a year ago, and 264 in the condominium-property category, a decrease of 27% from September 2021. The five-year average for total unit sales in September is 1,586.

“September’s lower sales performance reflects continued hesitancy among Buyers as they watch interest rates rise and consider the speculation surrounding price trends. With rising interest rates, the mortgage stress test has sidelined some potential Buyers, while others are likely scrutinizing their budgets for affordability amidst inflation and cost of living increases,” says Ottawa Real Estate Board President Penny Torontow.

“On the other hand, we have seen an uptick in the number of new listings entering the market, which were not only higher than last month but also last year, and the five-year average. This trend continues to bring the resale market into more balance, which generally means more time for Buyers and Sellers to weigh their options and to adjust according to their needs,” she adds.

By the Numbers – Inventory & New Listings:

• Months of Inventory for the residential-class properties has increased to 3.1 months from 1.2 months in 2021.

• Months of Inventory for condominium-class properties has increased to 2.7 months from 1.6 months in 2021.

• September’s new listings (2,371) were 5% higher than 2021 (2,252) and 13% higher than August 2022 (2,091).

“Prices are stabilizing with slight month-to-month movement, whereas, year over year we are seeing the slow and steady increases that the Ottawa resale market is known for. As every neighbourhood is different, Buyers will want to consult a local REALTOR® who can tap into proprietary data on price trends and expert insights to help them navigate market shifts,” Torontow advises.

By the Numbers – Average Prices*:

• The average sale price for a condominium-class property in September was $450,987, an increase of 6% from 2021.

• The average sale price for a residential-class property was $706,658, increasing 0.5% from a year ago.

• With year-to-date average sale prices at $788,535 for residential and $457,189 for condominiums, these values represent a 9% increase over 2021 for both property classes.

REALTORS® also help with finding rentals and vetting potential tenants. Since the beginning of the year, OREB Members have assisted clients with renting 4,678 properties compared to 3,598 last year at this time.

(SOURCE: OREB)

Members of the Ottawa Real Estate Board sold 1,137 residential properties in August through the Board’s Multiple Listing Service® System, compared with 1,565 in August 2021, a decrease of 27 per cent. August’s sales included 850 in the residential-property class, down 27 per cent from a year ago, and 287 in the condominium-property category, a decrease of 28 per cent from August 2021. The five-year average for total unit sales in August is 1,603.

“August is a traditionally slower month in Ottawa’s resale market ebb and flow cycle due to summer vacations. Compounding the slowdown in market activity, Buyers are uncertain about their purchasing power given impending additional interest rate hikes,” states Ottawa Real Estate Board President Penny Torontow.

“The lightning speed at which homes were selling at the start of 2022 is a thing of the past, evidenced by Days on Market (DOMs) inching closer to that 30-day mark. We have also observed a return to standard financing and inspection conditions and fewer multiple offer scenarios,” she adds.

Additional figures:

• The average sale price for a condominium-class property in August was $421,966, an increase of 4 per cent from 2021.

• The average sale price for a residential-class property was $707,712, increasing 5 per cent from a year ago.

• With year-to-date average sale prices at $795,978 for residential and $457,771 for condominiums, these values represent a 10 per cent and 9 percent increase over 2021, respectively.*

• 2,093 properties were listed in August, boosting inventory to nearly 3 months for residential class properties and 2.2 months for condominiums.

“Prices are still rising slightly in some areas, albeit lower single-digit percentage increases, bringing back the moderate price-growth stability that is characteristic of the Ottawa resale market. What happened to prices in 2020 and 2021 was unusual. We are moving towards a balanced market state, where Buyers have choices and Sellers need to ensure they are pricing their properties accurately,” Torontow advises.

“The informed market knowledge and insight of a licensed REALTOR® is critical to both Buyers and Sellers navigating market shifts. Sellers will want to closely explore with their REALTOR® the best time and price to list their home to optimize a property’s days on market. Buyers can use the extra time to work with their REALTOR® on due diligence and finding a dream home that meets their needs within their financial parameters.”

REALTORS® also help with finding rentals and vetting potential tenants. Since the beginning of the year, OREB Members have assisted clients with renting 4,172 properties compared to 3,182 last year at this time.

(SOURCE: OREB)

Members of the Ottawa Real Estate Board sold 1,110 residential properties in July through the Board’s Multiple Listing Service® System, compared with 1,718 in July 2021, a decrease of 35 per cent. July’s sales included 840 in the residential-property class, down 36 per cent from a year ago, and 270 in the condominium-property category, a decrease of 34 per cent from July 2021. The five-year average for total unit sales in July is 1,691.

“We are witnessing a profound slowdown in Ottawa’s resale market. July’s numbers reveal that Buyers are indeed putting on the brakes more heavily than what is typically expected during the mid-summer sales dip. Aggressive interest rate increases are surely impacting the decision to buy at the moment as well as other factors that I mentioned last month,” states OREB President Penny Torontow. “But there is a silver lining: with more properties continually being added to inventory, we are on the cusp of returning to a balanced market, and that is good news,” she adds.

“July saw 2,338 new listings added to the housing stock, which is on par with the 5-yr average and 5% lower than last year at this time. Our inventory for residential-class properties is currently around 2.9 months and 2.5 months for condominiums. A market is considered balanced with at least four months of supply, so we are well on our way to that paradigm.”

The average sale price for a condominium-class property in July was $425,694, an increase of 1 per cent from 2021, while the average sale price for a residential-class property was $716,354, increasing 5 per cent from a year ago. With year-to-date average sale prices at $805,238 for residential and $461,557 for condominiums, these values represent an 11 per cent and 9 percent increase over 2021, respectively.*

“The double-digit average price increases that we saw in the past couple of years right up until the early spring have now morphed into single-digit increases, which aligns more with our traditional stable year-over-year price growth. However, it is important to point out that average prices tally the entire spectrum of home sales across the city and region. If you look from neighbourhood to neighbourhood, there are so many differing characteristics and attributes, price increases will certainly fluctuate depending on where you live,” suggests Torontow.

“If you are selling your home, now is the time to be patient as days on market return to more normal timeframes. There are still many Buyers out there, but with more choice, they have less pressure and may take their time. Even though interest rates are still quite reasonable from a historical perspective, consumers are adjusting to this new reality. The rising cost of all goods means people need time to evaluate and adapt their mindsets.”

“I also believe it is time for the federal government to adapt and reassess the stress test. It was originally designed when rates were very low to ensure Buyers could manage rate hikes. With interest rates where they are now, they have to qualify at a 7-8% rate which no longer makes sense and takes many Buyers out of the market.”

“Whether you are a Buyer or a Seller, a professional licensed REALTOR® will help you navigate this shifting resale market. They have access to minute-by-minute sales data and local neighbourhood expertise that will assist you in making the best decisions for your circumstances.”

REALTORS® also help with finding rentals and vetting potential tenants. Since the beginning of the year, OREB Members have assisted clients with renting 3,528 properties compared to 2,706 last year at this time.

(SOURCE: OREB)