Equity Gains Drive Move-Up Activity in Ottawa Housing Market

The Bank of Canada (BoC) announcement to pause rate hikes in early January served to re-invigorate home-buying activity in the Ottawa housing market. Against a backdrop of lower housing values and less competition, buyers took to the streets early in the second quarter, taking advantage of more favourable market conditions, including five-year fixed rates at under five per cent.

Move-up purchasers were at the forefront, driving demand for single-family homes and townhouses priced from $850,000 to $1 million. While more than 7,700 homes changed hands in the first six months of the year, volume is down almost 20 per cent from levels reported one year ago. Average price year-to-date hovers at $658,809, falling short of the $727,379 reported during the same period in 2022.

Inventory levels have fallen – down 14 per cent from June of 2022 – which has contributed to an upswing in average price so far this year. In the first six months, the overall average price has increased 7.5 per cent, with residential values in June pushing within four per cent of June 2022 levels.

Equity gains factored into the decision to trade-up to larger homes or more preferable neighbourhoods for many this year, with average price up almost 60 per cent since 2018. There have also been a handful of buyers who purchased homes in 2021 choosing to upsize, selling their homes for what they paid in 2021 and applying the equity to the downpayment on their new home. Some buyers who purchased rural properties outside of the city early in the pandemic are now returning, deterred by longer commutes to downtown offices.

Suburban Kanata/Stittsville, Barrhaven, and Orleans remain top destinations for move-up buyers this year, with an ample supply of larger homes on good-sized lots available for sale. Buyers interested in downtown Ottawa may find a townhouse or two available under the $1 million price point but most buyers will need to ante up to purchase a single-detached home.

Market conditions are much tighter in the core, where supply constraints are contributing to an increase in competitive offers. While demand for homes in the first six months of the year has been relatively strong, the most recent BoC rate hike has created some uncertainty in the market moving forward. There are still a substantial number of pre-approved purchasers that have 120-day rate holds – which should serve to prop-up home-buying activity during the traditional summer slowdown – but moderation is expected to characterize the second half of the year, with performance in the Ottawa housing market comparable to the latter half of 2022.