The COVID-19 pandemic has caused economic uncertainty across the country, but you couldn’t tell by looking at the roaring real estate market in Ottawa.
The Ottawa Real Estate Board’s (OREB) most recent report shows that sales of residential properties increased by 17% in August compared to the same month the previous year. In a news release, OREB President Deb Burgoyne stated:
“August’s resale numbers were undoubtedly driven by the considerable increase in new listings that came onto the market in both July and August. There were at least 300 more residential and 175 more condo listings added to inventory than we saw last year at this time. In fact, we have not seen new listing numbers like this since August 2015.”
Prices also increased between 22% ($383,000) for condos and 24% ($592,000) for freehold homes.
A Seller’s Market
Real estate professionals noted that it’s a seller’s market, and many residents are looking to take advantage by putting their properties up for sale. Real estate in Ottawa is so hot right now that some homes are selling for tens of thousands of dollars, and even hundreds of thousands of dollars, over asking price.
One of the reasons people are willing to pay so much extra is because of the lower housing prices in suburban areas – they are realizing the value for money they can get outside the city’s core.
Real estate professionals also noted that with the high number of government-related jobs, employment in Ottawa seems to be more stable compared to other Canadian cities.
Buyers Face Challenges
While the current Ottawa housing market is great for sellers, buyers are finding it’s a little more difficult to navigate. Bidding wars and putting in multiple offers have become the norm, and buyers find they may have to go all-in with very few or no conditions at all. It can also be challenging to find something to suit individual needs.
With well-paying federal government jobs and low interest rates available, some Ottawans have a lot more to work with and are often the ones driving the strong housing market in the city. This is because better economic stability tends to give buyers more confidence in their ability to put in larger offers on a property.
Some residents say they’ve started seeing similarities between the Toronto housing market and Ottawa’s, though Ottawa continues to be more affordable. First-time homebuyers, in particular, are finding the current local housing market to be extremely challenging, as they face stiff competition and find themselves frequently outbid. Burgoyne added:
“What we need to be cognizant of is that Ottawa is a capital city and a growing city, that until now has been well-insulated when it comes to resale prices. If you look at other larger cities, they have gone through this already. We are just in the early stages, with no end in sight at this point. I suspect that prices are not going to come down, nor is activity going to slow down in the near future.”
Although Ottawa is seeing a spike in real estate activity right now, the Canada Mortgage and Housing Corporation (CMHC) predicts the pandemic’s lasting economic effects will negatively impact housing markets across the country.
In a statement on the CMHC’s second-quarter financial results last month, Lisa Williams, the corporation’s chief financial officer, shared:
“While it will take several months for the economic impacts of COVID-19 to fully materialize, some factors are starting to work their way into our financial results — for example, we are starting to see the impacts in our provisions for insurance claims.”
Most Canadian real estate markets will be forced to deal with significant uncertainty in the short-term, as well as decreasing housing demand due to limited household incomes in the medium-term, according to the CMHC.
But if job security and low interest rates continue to be the case in Ottawa, the city might just beat the odds and come out of the COVID-19 pandemic a little more unscathed than other major Canadian cities.