Strong Condo Sales a Highlight of Ottawa’s Resale Market in 2017
As we begin 2018, I want to wish my clients all the best for the new year, and to share with you some of the good news from Ottawa’s real estate market over the past year.
The final month of 2017 saw better than average sales volume in Ottawa’s resale market. These strong sales capped a year that saw Ottawa continue as a stable market and saw a rebound in condominium sales. Average sale prices for the year were up 6.8 per cent for residential units over 2016 and were up 3.4 per cent for condominium units over 2016.
The Ottawa Real Estate Board reports that its members sold 771 residential properties in December through the Board’s Multiple Listing Service System, an 8.4 per cent increase over the 711 properties sold in December of 2016. That’s also above the five-year average for December sales in the Ottawa area, which is 687.
Of the units sold in December, 205 were in the condominium property class and 566 were in the residential property class. The average sale price for a residential-class (non-condo) property in December was $434,098. That’s an increase of 3.4 per cent over the average price in December of 2016.
The average sale price for a condominium-class property sold in December, meanwhile, was $255,335, a decrease of three per cent from the average condo sale price in December of a year ago.
The Ottawa Real Estate Board cautions that although average sale price information for a specific month can be useful in establishing trends over time, it should not be used as an indicator that specific properties have increased or decreased in value.
Looking back at 2017, Ralph Shaw, President of the Ottawa Real Estate Board, says it “was another solid year for the Ottawa Real Estate market in both the number of transactions as well as the reasonable increase in prices, about seven per cent in residential and three per cent in the condo market. We continue to have a stable and balanced market. Although inventory tracked low all year and new listings were down each month, new home supply counteracted the impact somewhat.”
Looking at total numbers for 2017, there were 17,083 residential and condo units sold through the MLS system, an increase of 10 per cent over the number sold in 2016.
In 2017, the average sale price of a residential unit sold in the Ottawa area was $425,063, an increase of 6.8 per cent over the average sale price in 2016.
The average condominium sale price in 2017 was $269,903, an increase of 3.4 per cent over the average condo price in 2016.
I’m happy to report that 2017 was a terrific one for Nancy Benson and Associates, thanks the support of my clients.
One clear highlight of the Ottawa real estate scene in 2017 was the rebound in the condominium market, with a 22 per cent increase in the number of condo units sold over the previous year. The condo market had been in a bit of a slump for a while.
“The relatively flat increase in prices suggests that we found the ideal price point at which to move the units,” Ralph Shaw says.
As a Realtor who has been helping clients buy condominium units since long before the condo boom of the past 15 years or so, I wasn’t surprised over the past year to see many couples, both young and older, looking for condo units in the central areas of the city. These buyers are attracted by the proximity to our new transit system and the vibrancy of downtown neighbourhoods.
I also work extensively with employees of the Department of National Defence, and with the DND slowly moving into the new campus in west Ottawa, I’ve seen high demand from clients for properties in that area of the city.
As for the strong sales numbers in December for both residential units and condominium units in Ottawa, Ralph Shaw says it could be attributed to the new tighter rules on mortgage lending that came into effect Jan. 1 of 2018.
As of Jan. 1, in an effort by Canada’s federal financial regulator to ensure homebuyers can still afford their mortgages if interest rates rise, buyers who have a down payment of 20 per cent or more have to undergo the same mortgage “stress test” that buyers with smaller down payments have faced since last year.
Buyers must now be assessed to ensure they could still afford mortgage payments at the five-year benchmark rate published by the Bank of Canada (currently 4.99 per cent), or 2 per cent higher than the mortgage holder’s contracted rate, whichever is greater.
For some buyers, this will mean having to look for a smaller, less expensive property than they might have been able to purchase under the previous rules.
Experts say buyers can reduce the impact of the new stress test if they can come up with a larger down payment or reduce some of their other debt, such as credit card bills or car loans.
Ralph Shaw says that buyers in the Ottawa area are fortunate that average prices in our region are considerably lower than in some larger Canadian cities. The new stress test will have a lesser impact in our region than in those cities.
“One factor that will soften the blow of the new mortgage rules is Ottawa’s average price point in the $400,000s, which means our market will certainly fare better than those in Toronto or Vancouver.”
He points out that over the past year, in Ottawa’s residential (non-condo) market, “there was a good availability of product under $500,000, considering almost 10,000 out of approximately 13,500 residential units sold fell in that range.”
All of us in the real estate world will obviously be watching sales in the next few months to try to get a sense of the stricter lending rules and their impact on sales. Ralph Shaw says it will probably not be until the end of the second quarter of the year that we will be able to truly see the results of what he describes as a “poorly conceived piece of legislation.”
If you’re interested in buying or selling property in the Ottawa area, I’d love to chat with you about the current market and the services and expertise I can offer, with more than 30 years of experience as a Realtor. You can give me a call at 613-747-4747. If you’d like to see some of my current listings and read about the services we offer at Nancy Benson and Associates, you can visit my website at nancybenson.com.