The World Health Organization’s announcement of the scope and nature of the corona virus pandemic in March generally placed a freeze on all decision-making by home buyers and sellers across the country as they paused to consider the impact on their personal lives. In order to comply with new regulations regarding social-distancing, realtors had to adjust to showing properties without open houses through virtual tours. This resulted in the expected spring cycle of increased sales in the months of April, May and June showing an average drop of 40 percent year-over-year until a delayed sales resurgence in June when everyone had time to reflect on the general direction in which a pattern of everyday life seemed to be proceeding.
As new housing construction came to a virtual halt and a large percentage of wage earners found themselves immobile due to temporary layoffs a profile of the national realty market emerged. The Sales-to-New-Listing Ratio (SNLR) was shown to vary by city across the country with fairly balanced ratios of 40% to 60% from Manitoba to British Columbia as well as in the Toronto and Niagara Region. The rest of Ontario and all realty stretching all the way to the east coast provinces showed a highly competitive seller’s market with ratios over 61% (even as high as 93% in Quebec).
Ottawa: A Seller’s Market
Throughout the COVID-19 slowdown Ottawa ranked second nationally in terms of markets where home buyers faced the most competition. Although sales were down 44%, new listings declined slightly more, by 49% year over year. This resulted in an SNLR of 81% in May 2020 versus an SNLR of 75% during the same period in 2019. The strong competition between buyers was reflected in the 13% annual increase in the average home price in the area to $510,215.
A Note of Optimism
In a study released in the last week of May, the Real Estate Investment Network predicted Ottawa would be the only one of the five major Canadian markets it surveyed that would avoid a housing slump in 2020.
The organization said after analyzing real estate markets in Vancouver, Calgary, Edmonton, Toronto and Ottawa based on factors such as GDP, jobs and population, it determined that all of them were in the beginning or the middle of downturns – except the nation’s capital.
On The Rebound
During the period of reduced activity Ottawa was still seen to be one of those few urban locations in Ontario where the Home Price-To-Median-Income ratio created a condition in which buyers could expect to pay off their home purchase in almost half the time of home buyers in the Toronto-Niagara area where home prices had risen through the ceiling in recent years.
By the beginning of June this year the Ottawa Real Estate Board reported that 1,345 homes traded hands locally in May, a decline of 44 per cent over May 2019. That was far from the 55 per cent drop in sales recorded in April, when only 913 homes sold.
A Note of Caution
By the end of June the Canada Mortgage and Housing Corp. predicted that home prices will drop in 2021 before inching up again the following year.
In a special Housing Market Outlook report covering the country’s major cities, CMHC said that local residential property prices will remain strong this year, averaging between $451,500 and $481,000. However, their report expected those prices to drop to between $406,000 and $460,000 in 2021, caused by a weaker demand for homeownership due to pandemic-created job and income losses.
CMHC went on to predict that “housing starts will trend lower throughout 2020, both because of uncertainty surrounding the COVID-19 pandemic and the high level of inventory under construction that’s tying up scarce labour and equipment”.
Housing Sales in Ottawa by End of June
In its July 4th report for this year Ottawa Real Estate Board Members were shown to have sold a total of 1441 Residential Properties in June 2020, down by 6.4%. 1041 were freehold house sales, down 4.4% and 400 were condo sales, down by 11.1%.
The average price for all residential homes last month, which includes houses and condos was found to be $558,533 (an increase of 15.7% over 2019).
Average house price in Ottawa is now $632,075 (an increase of 14.3%),
While the average condominium price in Ottawa is now $367,137 (an increase of 17.6%).
In June houses took just 16 days to sell versus 23 last year while condominiums took 22 days to sell versus 40 days last year.
During the same period there were 2604 Residential Properties listed for sale, 2117 of which were Freehold Listings (down 31.4%), while 487 listings were condos, (down by 35.3% over same month last year).
Right now the competition in Ottawa is fierce for buyers and a boon for sellers; houses being sold over the asking price in many cases.
Having a realtor with a proven track record is highly recommended.