If you’ve ever visited Ottawa, you know that there are numerous world-class museums and historic landmarks to discover, including Parliament Hill and the Rideau Canal. But our nation’s capital is more than a tourist attraction. The Ottawa housing market also has a lot to offer.
With a population of nearly a million people, Ottawa is among the world’s most desirable places to call “home.” The city boasts a high standard of living, plentiful education options and relatively affordable housing.
Ottawa’s average housing prices typically trend below the national average, which is great for those in search of affordable city living. But more recently, the pandemic has pushed Ottawa’s housing prices beyond normal levels. For context, the national average sale price in July 2021 reached $662,000. Meanwhile, the Ottawa Real Estate Board (OREB) reports the average sale price for a condominium-class property was $419,545, up 17 per cent year-over-year, while the average sale price for a residential-class property reached $685,426, also a 17-per-cent increase from July 2020. Year-to-date, average sale price reached $728,107 for residential and $422,339 for condominium properties, representing gains of 30 per cent and 20 per cent, respectively.
Will this trend continue, or will the Ottawa housing market return to more-normal levels?
Ottawa Housing Market is Shifting to Pre-Pandemic Levels
As with most cities across Canada, the pandemic sent housing prices soaring and created a seller’s market across Ottawa. The boom in the market has left many buyers wondering if the market would ever cool. July gave us an answer.
According to OREB, the Ottawa housing market trended toward stabilization in July, as sales returned closer to pre-pandemic levels. There were 1,724 residential properties sold in July, versus 2,183 units sold in July 2020 – a 21-per-cent decline year-over-year.
The decrease in sales puts July 2021 more in line with pre-pandemic levels of activity. July’s sales volumes were slightly below the five-year average for July (1,775 transactions) and July of 2019 (1,838 properties sold).
OREB President Debra Wright says that recent activity followed a more predictable pattern. “July’s unit sales followed the traditional cycle of the spring and summer markets, which tend to peak around April or May and then slow down as buyers and sellers turn their attention to their vacations and other outdoor recreational activities.”
The drop-off in sales in July comes as no surprise. The summer of 2020 tracked well above the typical seasonal trends. The spring shutdown slowed sales in the housing market, but as the initial economic shutdowns lifted, the usual spring demand shifted into the summer months.
Prices Still Up in Ottawa Housing Market
According to OREB, home prices continued to climb in July, but at a less frantic pace. Though the number of units sold was down, prices for both condo- and residential-class properties were each up 17 per cent in July 2021 compared to July 2020. But the year-over-year numbers don’t tell the whole story.
When you zoom into 2021 sales, prices were trending down. July’s sales represent a marginal drop of 4 to 6% from June’s average housing prices. The Housing Price Index, a more accurate gauge of home price levels and trends, shows Ottawa’s housing prices peaking in May of 2021, before starting on a downward trajectory.
What is the Future of the Ottawa Housing Market?
Is Ottawa’s return to pre-pandemic levels a mere blip, or the new reality? According to Wright, the “multiple offer frenzy experienced” previously is no longer the norm and sellers may need to have “more realistic expectations” when setting a listing price.
Two main trends influence the return to a more blanched market: prices have stabilized throughout 2021, coupled with an increase in inventory on the market. Residential supply was up 19 per cent, and condo supply was up 23 per cent from the same time in 2020.
Wright sees these trends as a positive step. “We hope this may indicate that Ottawa’s resale market is moving towards a more balanced state, which would be good for everyone.”
The trends that are happening in Ottawa mirror the national numbers. According to the most recent Quarterly Forecast from the Canadian Real Estate Association, “the urgency and frenzy of earlier in 2021 have started to fade and the market has settled down a bit, at least in a relative sense.”