The capital of Canada has long been known as a destination that is suitable and welcoming for just about anyone looking to make it home. With plenty of corporate and government jobs, four post-secondary institutions, and quiet neighbourhoods surrounding a bustling downtown hub, Ottawa is the perfect place for residents regardless of age or stage of life. Over the past two years, the Ottawa real estate market and its surroundings have seen a surge in activity, spurring some unprecedented trends. Much of this migration has been driven by pandemic and the lifestyle changes which accompanied it, and the local housing market has struggled to keep up with the growing demand.
Accordingly, Ottawa is experiencing less-than-ideal levels of inventory and skyrocketing prices across all property types. Here are some recent figures coming out of the Ottawa housing market.
Low Inventory Adds Strain to the Hot Ottawa Real Estate Market
Since early 2020, the Ottawa housing market has been steadily heating up. Houses have been flying off the shelves amid surges in demand, and prices have also been heading in an upward direction. With record-breaking numbers surfacing across most of 2020 and some of early 2021, the month of October has seen the Ottawa area real estate market to finally show a slight cooling. The Ottawa Real Estate Board recorded 1,677 units in property sales in October 2021 through the Multiple Listing Service (MLS) System. While this is just slightly above the typical five-year average, which sits at 1,605, it is a drastic drop of 21 per cent compared to October 2020 when 2,132 units changed hands.
The unit sales for the month included 1,263 residential-property class and 414 in the condominium/apartment class – a decrease of 24 per cent and 14 per cent respectively compared to October 2020. Ottawa Real Estate Board President, Debra Wright, states “The number of transactions increased slightly over September (1,607) as well as the five-year average. The only reason we see a year-over-year decrease in comparison to last October is because 2020’s sales peak had shifted from the spring months to September/ October due to the initial Covid-19 lockdown.”
Prices in the Ottawa region are still on the rise, with the year-to-date average sale price for single-family dwellings hitting $720,150 and condominiums reaching $419,515. These values are 24 per cent and 16 per cent above October 2020 values, respectively. Particularly of note is the monthly average sale price for a condominium-class property in the city. In October, the average price of a condo/apartment sold was just $404,760. While this is an increase of 10 per cent year-over-year, it remains below the average for this metric for the rest of 2021, as evident by the high year-to-date value. Could the softening prices for condominium and apartment units in Ottawa be indicative of cooling prices for other property types in the near future? This will hinge upon supply levels in Ottawa’s winter buying and selling season.
First-time homebuyers in the Ottawa region are struggling when it comes to finding a property – and the ripple effect is felt to the top of the housing chain. Wright states in the most recent market update, “Low inventory and a lack of suitable housing options restrict movement along the housing spectrum. Move-up buyers and downsizers have nowhere to go, so they stay in place, but we need that exchange of properties in the marketplace to free up supply for entry-level homebuyers.”
Due to the lack of movement in the Ottawa housing market, homeowners are holding off on listing their property, which is constricting inventory in the city. Just under the five-year average of new listings for the month of October, this past month saw 1,960 new listings, which just isn’t quite the number needed to replenish a nearly starving market. A consistently low number of new listings has led to a depletion of inventory, where now just 1.2 months of condominiums and one month of residential properties remain on the Ottawa real estate market. It is no secret that this lack of supply puts upward pressure on the prices in the market.
Will the Ottawa Housing Market Cool Down with the Winter Weather?
With October being the first month to reflect a return to pre-pandemic trends, there are hopes that the Ottawa real estate market will continue to move in this direction. As we move into 2022, a steady increase in new listings and subdued demand could help ease market conditions.
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