May 2021 - Ottawa Real Estate Market
Tuesday May 11th, 2021
!! +42.3% !!
That’s what the data shows for the year over year average sale price growth for the month of April 2021 ($743,204) vs April 2020 ($522,151)…and it is accurate. But before we get too carried away on this ‘To the Moon” Ottawa market, let’s look at where we were one year ago:
April 2020 was the first full month of the Covid-19 pandemic in Canada. A state of emergency was in place and there were (and still are) so many unknowns. There was a justifiable dip in sale prices in Mar/Apr 2020 as both buyers and sellers briefly decelerated activity. I guess my point is that, yes, the year over year growth in home prices continues to be strong, but the 42.3% should be taken with a grain of salt.
In most of my conversations as to “Why the price appreciation?”, I usually talk about inventory/supply which I believe is still the main driver of the growth. For inventory, I normally show a graph of the last two years to give people a sense of the trend. This time, let’s look at a longer time series to look at the bigger picture:
From 2014 to 2016, when Ottawa was in a more balanced real estate market, there were, on average, 8,150 active residential listings on the market in any given month. Compare that stat to the recent timeframe of January 2020 to April 2021 where the average drops to 1,800! Since 2020, we will say there has been ONE QUARTER the amount of homes on the market in any given month vs 5-7 years ago. Quite a drop! Focusing on the short term, we have seen active listings climb in each of the last three months in the residential space. Let’s keep an eye on this number if it continues to grow. For now, a seller’s market continues and will only change if we can see sustained growth in supply.
The Bank of Canada
Another question I receive a lot is on interest rates, “When are rates going to go up?” That’s always a bit more difficult to answer, but I usually refer to the latest Monetary Policy Report published by the Bank of Canada (BoC). In their April 2021 report, the key messages were that the Canadian economy showed resilience during the second wave of the pandemic but there are still many unknowns going forward. However, the BoC did say that based on the recent economic data and projections, that their 2% inflation target may be sustainably achieved “in the second half of 2022”, which could be a sign of a rate hike. This date has moved forward from “sometime in 2023” in their previous report. An area that we will continue to monitor closely.
Switching to condos, in April 2021 the average price of a condo in Ottawa was $427,145, up 30.3% from the previous April:
Even with the push for “more space” with respect to people’s housing needs over the last year, the condo market continues its appreciation as well. A couple years ago, a first-time home buyer could buy a new townhome in an Ottawa suburb with their $500,000 budget. Now towns are $550,000+…even $600,000+…and yes, even $700,000+ in some of the burbs. Are these buyers with a $500k budget now switching to look at a condo? Potentially? As the prices of “entry-level" homes continue to climb, I can perhaps see buyers purchasing a condo to simply get into the market.
For condo supply, in April 2021, there were 5% more condo units available for sale than the previous April:
Inventory in the condo sector has been more stable and consistent in the last few years although still low when examining the long-term trend.
Speaking of Condos…
Check out my new listing in Lebreton Flats:
If you know anyone in the market for a larger, 2 bed/2 bath, ground floor unit in a pet friendly building, pass this on to them! Remember, REFERRALS PAY!!
The pace of the Ottawa real estate market continues to impress. In April, the average number of days a residential home was on the market was NINE, with 1,859 transactions overall! Buyer fatigue has not seemed to have set in just yet as multiple offers on properties continue to be the norm. The Bank of Canada has moved up their expectation for a potential interest rate increase which may decelerate activity, however, supply continues to be the topic and will be monitored closely as we head into the second half of spring.
Please feel free to ask any questions and I’ll do my best to answer them in future posts. In the meantime, I’ll continue to keep you up to date on the Ottawa real estate market.
Have a great day!