Ottawa’s May Residential Resales Underperform Expectations

Members of the Ottawa Real Estate Board sold 1,846 residential properties in May through the Board’s Multiple Listing Service® System, compared with 2,285 in May 2021, a decrease of 19 per cent. May’s sales included 1,384 in the residential-property class, down 22 per cent from a year ago, and 462 in the condominium-property category, a decrease of 11 per cent from May 2021. The five-year average for total unit sales in May is 2,031.

“With year-over-year resales declining in March and April, and now with this downward trend continuing into May, traditionally the highest performing month for resales, it is quite clear that Ottawa’s resale market is shifting away from the blazing pace of 2021,” states Ottawa Real Estate Board President Penny Torontow. “And if rising interest rates, cost of living, and inflation aren’t enough factors to cause a pullback, the powerful and deadly storm that brought our city to its knees last month has justifiably impacted the market as well.”

“Our data shows a sharp decline in new listings with a corresponding increase in cancelled/suspended listings on the MLS® System in the period following the storm. Overall, in May, however, there were 3,120 properties that entered the market. This is on par with last May and is 5% over the 5-year average. The result is an 18% increase in residential-class inventory. Meanwhile, there was a slight decline (0.4%) in condominium inventory, but this is not surprising since they have likely become an entry point for many first time homebuyers due to the affordable price point.”

The average sale price for a condominium class property in May was $472,920, an increase of 11 per cent from 2021, while the average sale price for a residential-class property was $802,393, increasing 8 per cent from a year ago. With year-to-date average sale prices at $824,276 for residential and $470,353 for condominiums, these values represent a 12 per cent increase over 2021 for both property classes.*

“Average prices, while still higher than 2021, are showing signs of adjusting to the pace of the market with a month-over-month decrease of 2% in both property classes. In April, we also saw a decline of 1-3%. In contrast, January to March experienced month-to-month increases ranging from 2% to 12%. This may be good news for Buyers, including the fact that the months of inventory have increased to 1.2 for residential and 1 month for condominiums. We are still a far cry away from a balanced market, but it finally seems to be moving in the right direction,” Torontow suggests.

“Additionally, another statistic that we see increasing is the cumulative days on market (CDOM), which is now 14 days, increasing from 11 days last May. CDOMs are typically between 30-60 days in a balanced market, and usually closer to that one-month mark in Ottawa. I mention this because we don’t want Sellers to panic if their homes aren’t selling as quickly as perhaps their neighbours’ properties did. Buyers will also have a little more breathing room if this trend continues.”

“But at the end of the day, each property for sale has its own hyper-local market factors (location, condition, other properties for sale in the same neighbourhood, etc.) that will affect the final sale price. If you want to know the most accurate price point to sell your home or what is the true market value of a home you are interested in, a licensed professional REALTOR® has the education and the experience with access to the most current market statistics and property information, to guide you into making the optimal decision for you and your budget.”

REALTORS® also help with finding rentals and vetting potential tenants. Since the beginning of the year, OREB Members assisted clients with renting 2,320 properties compared to 1,837 last year at this time.

* OREB cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Price will vary from neighbourhood to neighbourhood.

Members of the Ottawa Real Estate Board sold 1,889 residential properties in April through the Board’s Multiple Listing Service® System, compared with 2,394 in April 2021, a decrease of 21 per cent. April’s sales included 1,419 in the residential-property class, down 23 per cent from a year ago, and 470 in the condominium-property category, a decrease of 13 per cent from April 2021. The five-year average for total unit sales in April is 1,849.

“With the number of transactions just slightly over the 5-year average, this was one of the weakest performing Aprils we have seen in a while,” states Ottawa Real Estate Board’s President Penny Torontow. “Considering that the number of new listings increased last month, it is a bit of a surprise that sales were off.”

“Certainly, there are a few factors at play: rising interest rates, growing Buyer frustration, April’s cooler temperatures, as well as the housing supply measures recently announced by the government - these could all be causing Buyers to pull back with a wait-and-see approach. We are watching the rest of the spring market closely to determine if this could perhaps be an early indicator of a shift in the market. Since April is only one month, we will be monitoring to see if it becomes a trend moving forward.”

“The fact remains that it is still a Seller’s market with supply under one month. Bidding wars and multiple offers persist in some pockets, prices continue to rise, albeit more moderately, and the market remains relatively strong,” she adds.

The average sale price for a condominium class property in April was $473,702, an increase of 11 per cent from 2021, while the average sale price for a residential-class property was $829,318, increasing 12 per cent from a year ago. With year-to-date average sale prices at $830,588 for residential and $469,603 for condominiums, these values represent a 13 per cent and 12 percent increase over 2021, respectively.*

“Limited supply and high demand will continue to place upward pressure on prices. And as long as there are Buyers willing to pay, average prices will reflect the inventory shortage. However, it is conceivable that price growth may moderate as we do not see the level of price escalations that occurred earlier in the pandemic,” Torontow suggests.

“Although the number of new listings in April (2,846) was down by 11% from 2021, the number of properties that entered the market was still 10% over the 5-year average (2,600), and 214 units more than what was added to the housing stock in March. This has increased Ottawa’s months of inventory to just under a month’s supply. In March, it was just over two weeks. This is good news for potential Buyers as they will have more options and more opportunities to enter the market.”

“In fact, the condominium market may be performing slightly better than residential property classes due to the fact that they are the most affordable price point to enter the market and could possibly now be considered the new entry-level property type.”

“We have also noticed a marked increase in the number of rental properties listed on the MLS® System. Since the beginning of the year, OREB Members assisted clients with renting 1,786 properties compared to 1,458 last year at this time. An increase of 23% and almost double the quantity recorded in pre-pandemic years. As for lease prices, the average cost for a 1-bdrm is approximately $1,850, and a 2-bdrm is $2,200 for rentals listed on the MLS® System. These values are roughly 3-4% higher than this time in 2021. Ottawa REALTORS® are an excellent resource when it comes to finding a rental property or vetting tenants – contact one today!”

* OREB cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Price will vary from neighbourhood to neighbourhood.

Members of the Ottawa Real Estate Board sold 2,011 residential properties in March through the Board’s Multiple Listing Service® System, compared with 2,274 in March 2021, a decrease of 12 per cent. March’s sales included 1,493 in the residential-property class, down 12 per cent from a year ago, and 518 in the condominium-property category, a decrease of 10 per cent from March 2021. The five-year average for total unit sales in March is 1,792.

“Although the number of sales in March decreased from last year at this time, it was still a robust and busy start to the spring season. Transactions increased 42% over February (590 units) and were 12% higher than the 5-year average. Last March was unseasonably warm in comparison, and the lion-like weather that pervaded most of this March may have played a role. More likely, the lifting of some restrictions and opportunity for unfettered travel during the spring break had peoples’ attention turning towards other activities during the month,” states Ottawa Real Estate Board President Penny Torontow.

“March tends to be the early indicator of the spring resale market pace, so we anticipate April’s numbers will be a better indication of just how the spring market will perform, which tends to be the peak time of year for resales,” she adds.

The average sale price for a condominium-class property in March was $479,405, an increase of 10 per cent from 2021, while the average sale price for a residential-class property was $853,615, increasing 13 per cent from a year ago. With year-to-date average sale prices at $831,122 for residential and $467,915 for condominiums, these values represent a 14 per cent and 13 percent increase over 2021, respectively.*

“Average prices continue on their upward trend, albeit only increasing 2-3% over February’s figures, the year over year percentage increases of 13-14% validate that the housing supply shortage will continue to put strong upward pressure on prices until that is remedied.”

“Last month saw 2,632 new listings enter the MLS® System, and although 6% lower than March 2021, this is still 4% (or 100 units) above the 5-year average. Residential-class property inventory is approximately 10.5% higher than last year at this time, with condominium-class inventory down 12%. Overall, we are just slightly over (.6%) a half month’s supply of inventory and require at least four months of inventory to be considered within a balanced market.”

“It is encouraging to see new inventory entering the resale market. However, these properties are being quickly absorbed due to the unrelenting high demand, and more listings are crucial to meeting this need,” Torontow advises.

“We appreciate the provincial government has introduced the first phase of its More Homes For Everyone Act to tackle the housing shortage by implementing measures, including working with municipalities to get homes built faster and increasing the Non-Resident Speculation Tax. This is a good start, and we are hopeful that with the application of these and further measures, Ottawa’s many potential home buyers waiting on the sidelines will finally be able to get a foothold in our local market.”

In addition to residential sales, OREB Members assisted clients with renting 1,291 properties since the beginning of the year compared to 1,079 by March 2021.

* OREB cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Price will vary from neighbourhood to neighbourhood.