The spread of the COVID-19 virus convinced most people in Ottawa that April was not the time to buy or sell property.
The number of residential properties that changed hands last month plummeted 56 per cent year over year to 700 while just 213 people bought condos — down 51 per cent from April 2019. This is a tiny fraction of the roughly 400,000 properties across Ottawa.
Yet, there’s a more complicated story here as well. Given the deep reluctance of buyers to canvass neighbourhoods or of sellers to allow strangers into their homes, it’s actually rather surprising the plunge in the number of sales wasn’t deeper. In greater Toronto for instance, industry sales volumes shrank a stunning 67 per cent year over year.
Equally remarkable in Ottawa, average sale prices jumped more than six per cent year over year to $521,700 and $327,800, respectively, for residential properties and condos. In greater Toronto, average prices over the same period were flat.
What’s happening here?
John Rogan thinks he has an explanation. The broker of record and manager of Royal LePage Performance Realty has been in the real estate business for 53 years, most of it spent in Ottawa.
While Rogan has seen nothing like the spread of the COVID-19 virus as a disruptor of business, he says the city’s economy has several attributes that offer relative protection even in times of severe stress.
“Lots of people have been hurt by the virus,” he says, “but family incomes are still relatively secure in Ottawa and there’s lots of in-migration.” Rogan adds that before COVID-19 forced the lockdown of the economy in mid-March, the real estate market had been on fire. From January to mid-March, average price gains year over year topped 20 per cent for residential and condo markets alike.
Rogan says this momentum spilled over into April. “Anywhere from 20 to 40 per cent of the time, we’re still getting multiple offers for the properties that are for sale,” he says. That’s down somewhat from February, when the Ottawa Real Estate Board reported that nearly 60 per cent of properties were sold following a bidding war.
“There’s still pent-up demand,” board president Deborah Burgoyne agreed in an interview. “This is also an industry that’s been finding its feet since mid-March. Brokers are doing virtual viewing and have figured out how to buy and sell properties using the appropriate safety protocols,” she added.
The demand takes several forms. Younger clients tend to be less concerned about the risks of COVD-19. There are also potential buyers entering the market who were frustrated by their previous inability to secure a property after losing bidding wars. And, of course, hundreds of people move in and out of Ottawa in any given month because they’ve landed new jobs or family circumstances have changed.
Ottawa’s real estate brokers remain convinced that home and condo sales will return to more normal levels once the economy re-opens.
“Although it won’t be business as usual when the market opens up again,” says Burgoyne. “We believe sales will rebound and make up for the spring decline.”
Burgoyne and Rogan acknowledge much depends on the duration of the economic lockdown. If the city’s jobless rate remains above 20 per cent for the summer and beyond, it’s difficult to believe it won’t have a negative impact on residential sales and prices.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
