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Ottawa home sale prices up 19-20% in 2020, real estate board says – Global News

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The average sale prices of both homes and condos in Ottawa rose 19-to-20 per cent over the course of 2020, according to a group of local realtors, with activity in the city’s real estate market roaring back following a coronavirus-driven slowdown in the spring.

Members of the Ottawa Real Estate Board (OREB) sold 18,971 residential and condo-class properties in 2020, a two-percent bump over 2019 figures.

Though December experienced a typical holiday slowdown in comparison to preceding months, unit sales were nonetheless up 32.4 per cent year-over-year with just over 1,000 properties changing hands, according to OREB year-end numbers released Wednesday.

Read more:
‘We haven’t seen anything like this before’: pandemic boosts Canadian real estate

While the number of residential-class property sales was up three percent in 2020, the total number of condo sales dipped 1.5 per cent year-over-year.

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The OREB has said in previous months that buyer behaviours shifted over the course of the pandemic, with the new work-from-home reality spurring many to seek larger living spaces.


Click to play video 'Real estate is one of the few sectors showing strong growth in Canadian economy'



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Real estate is one of the few sectors showing strong growth in Canadian economy


Real estate is one of the few sectors showing strong growth in Canadian economy – Oct 4, 2020

Despite steady transaction numbers year-to-year, the annual growth in average sale prices accelerated in Ottawa in 2020.

The average sale price of a condo in 2020 rose 19 per cent to $361,337, while residential units retailed at an average of $582,267, up 20 per cent year-over-year.

OREB said the total sales volume of properties in Ottawa topped a value of $10 billion last year, up from $8.2 billion in 2019.

Read more:
Canada planning foreign buyers tax in effort to lower country’s housing prices

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The 19-20 per cent increase in average sale prices for 2020 outpaces the nine per cent price increase seen in 2019 and the three-to-five per cent increase seen in 2018, according to OREB president Debra Wright.

“These substantive increases in property prices from year to year can be attributed to a variety of factors: the inventory shortage triggering economic supply and demand realities; the multiple-offer phenomena; the record-low mortgage rates increasing purchasing power of buyers; migration of buyers from larger markets with high returns to spend; and so forth,” Wright said in a statement.


Click to play video 'Canadian home prices forecast to rise 5.5% by the end of 2021'



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Canadian home prices forecast to rise 5.5% by the end of 2021


Canadian home prices forecast to rise 5.5% by the end of 2021 – Dec 14, 2020

Ottawa’s real estate market ended 2020 with average sale prices of $603,880 for residential properties and $355,982 for condos over the course of December, OREB stats showed.

Wright highlighted a drop-off in sales at the lower-end of the real estate market as a sign of eroding housing affordability in the nation’s capital. In 2019, 35 per cent of transactions were valued at $400,000 or lower; in 2020, the proportion of sales under $400,000 dropped to just 16 per cent.

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Read more:
Federal funds to create 109 affordable housing units in Ottawa; councillors push for more in budget

While the start of the pandemic put a “momentary stall” on Ottawa’s housing market this past spring, activity picked up throughout the rest of the year and “accelerated past all expectations,” Wright said.

Ottawa’s economy, buttressed by strong public sector employment and a rising tech sector, has helped to keep the city’s housing market “resilient” during the pandemic,” she added.

Though the city has seen lower price thresholds than other major Canadian metropolises in the past few decades, Wright said Ottawa’s housing market “is now beginning to reflect the real estate property values of a national capital.”

“Going forward, I fully expect Ottawa’s resale market will continue to be robust in 2021. There are no indicators to suggest that this is an overheated market – it is simply very active, insulated, and strong. One that has only been mildly shaken by a world-wide pandemic,” she said.


Click to play video 'More home buyers purchasing homes with ‘no conditions’, according to Kingston real estate agents'



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More home buyers purchasing homes with ‘no conditions’, according to Kingston real estate agents


More home buyers purchasing homes with ‘no conditions’, according to Kingston real estate agents – Nov 4, 2020

© 2021 Global News, a division of Corus Entertainment Inc.

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How likely is a Canadian real estate crash in 2021? – Mortgage Broker News

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How likely is a Canadian real estate crash in 2021?

Ah, the Canadian housing crash. Always just around the corner, yet never seeming to materialize. People write and talk about the derailing of the real estate gravy train so frequently that a person could be forgiven for thinking some portion of the population is secretly rooting for it to happen.

So, what then to make of Lowestrates.ca’s report: Will the Canadian Housing Market Crash in 2021?

To the credit of authors Lisa Coxon and Zandile Chiwanza, the report tries to present the possibility of a housing crash from opposing angles – one arguing the unlikelihood of a crash and the other saying a crash has “already started”.

Why a crash isn’t likely

For the pro-crash perspective, Coxon and Chiwanza lean heavily on the fact that both corporations and households are more indebted now than they were in 1990, the last time the Canadian housing bubble was said to have popped due to a recession. While debt levels in Canada are far higher today than they were 30 years ago, interest rates are also far lower. According to Statistics Canada, the conventional rate on a five-year mortgage was 13.35% in 1990, which would give borrowers far less breathing room in the case of financial disruption. And lest we forget, the recession triggered by COVID-19, deemed “the deepest but shortest recession in history”, is technically already over.

Even taking into account the inflated prices homeowners are paying now compared to 1990, few experts see a wave of delinquencies, defaults, or foreclosures hitting the Canadian market in 2021.

“Generally speaking, we’ve seen a flat pattern coming out of [mortgage] deferrals in terms of consumer delinquency overall,” Matt Fabian of TransUnion told MBN. “Certainly, with mortgages, we’re actually seeing a little bit of a drop in delinquency rates.”

But Coxon and Chiwanza argue that the end of programs like mortgage deferrals and government wage subsidies leave the market at risk. They turn to Hilliard MacBeth’s, author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash, comments on the condo market for confirmation that trouble is already brewing.

“‘It’s showing up in the condo market first,” it is stated. “There’s a huge surplus in the condo market, both on condos for rent and condos for sale. And then related to that, there’s a huge number of new purpose-built rentals either on the market or are about to hit the market.’”

Here is where theories of a market crash typically start breaking down, in this author’s opinion. They assume, possibly because Canada’s population is as modest as it is, that the Canadian real estate market is a tiny, self-contained ecosystem where a single pollutant can contaminate the entire thing. That’s not the case. There is no “Canadian real estate market.”

The condo market and the detached market are entirely separate entities. The price of one does not directly impact the price of the other. Sure, if home prices grow too quickly buyers will be forced to start purchasing condos, a trend that will drive condo prices up; but the phenomenon doesn’t work the other way. If condo prices fall, that has no impact on the prices of other housing types. Has anyone reading this article seen evidence that Canada’s falling condo prices slowed the growth of townhouse, detached, or semi-detached prices in 2020?

It’s also important to keep in mind that local real estate markets in Canada are insulated by geography. Falling home prices in Alberta, for instance, will not affect prices in any other province. Why would they?

A nationwide housing crash would require a financial calamity – think 2008 in the US – that threatens the livelihoods (and mortgages) of many of the country’s homeowners, forcing tens of thousands of them spread across every major Canadian real estate market to sell their homes simultaneously, thereby dragging home values down in each one. Those values would then have to be brought low enough that homeowners holding on to their properties would see the entirety of their equity wiped out and be forced to sell into a tanking market. That’s not likely to happen in communities where home values have risen by 5-10% annually over the last several years, and there is no shortage of those.

To be fair, MacBeth isn’t the only person expecting prices to drop. The Real Estate Investment Network recently released a report encouraging investors to prepare for a rise in delinquencies and foreclosures in the third quarter of 2021.

“Housing prices are the last to be affected,” by factors such as decreased economic growth, higher unemployment, and falling immigration numbers, REIN’s Jennifer Hunt said. “They’re lagging indicators. So yes, you’re seeing in many cities in Canada these frothy markets. But that’s exactly the behaviour we look for in a market that is entering a slump.”

A more probable outcome

Even LowestRates.ca CEO Justin Thouin isn’t expecting anything resembling a crash to hit Canadian real estate in 2021.

“Personally, I don’t think we’re going to see a crash,” Thouin told MBN, but added that the amount of debt being carried by Canadians does pose a threat to their ability to pay their mortgages.

“If I were to be most concerned, it would be in the prairies, specifically in Alberta, where the economy is far worse off than the rest of Canada,” he said.

In Thouin’s opinion, low interest rates will continue protecting homeowners from delinquency, while the rebound in immigration and employment expected by many in 2021 should help the economy recover from what has already been almost a full year of COVID-19-related nausea.

This more optimistic view is the predominant theme in LowestRates.ca’s report, which includes Moody’s Analytics economist Abhilasha Singh’s view that home prices in Canada could fall this year, but only by 5% or so.

“‘We expect home prices to fall,’ said Singh. ‘But the recovery is going to be very quick, especially after looking at the results of the vaccines.’” 

She told LowestRates that a crash isn’t on the cards.

“We are expecting a modest correction,” she said. “But not a crash.” 

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2021 home sales will rival 2016 boom year, says B.C. Real Estate Association – Vancouver Sun

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Article content continued

Last summer, real estate agents described pent-up demand for detached homes following the pandemic shutdown. They said this trend has been sustained as some buyers who want more space, often because they are now working at home, also have more purchasing power with lower interest rates. Overall, however, they weren’t seeing the dynamics of the boom years of 2015, 2016 and 2017.

Now, some of them are starting to sense a boom.

“The market is really hot right now and it’s not slowing down,” said Vancouver real estate agent Steve Saretsky. “Most of the froth is in the single family housing market. It’s insanely competitive and comparable to 2016. The condo market is much more balanced though, and buyers can take more time to sift through the inventory.”

“Single family inventory for sale is near record lowest on record. If you’re looking for a house under $2m, there’s 1.6 months of supply. That’s insanely tight and is creating bidding wars. People are seeing prices getting bid up, and now there’s a fear of being priced out.”

Marion Chekaluk, co-founder of Ecom Appraisals Inc. said mid-December to mid-January is usually a very slow time of year for the appraisers and lawyers who process real estate transactions.

But in recent weeks, everyone in her office has been “absolutely run off their feet. I’m getting lenders calling constantly. I had three this (Monday) morning, saying ‘a deal is supposed to happen,’ that ‘subjects need to be removed today. And we’re waiting on this report. You saw the property on Friday.’ They’re asking our appraisers not to take a weekend and I’m saying to them, ‘no, you take your weekend. Because if not, you’ll get burned out.”

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2021 home sales will rival 2016 boom year, says B.C. Real Estate Association – Vancouver Sun

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Article content continued

Last summer, real estate agents described pent-up demand for detached homes following the pandemic shutdown. They said this trend has been sustained as some buyers who want more space, often because they are now working at home, also have more purchasing power with lower interest rates. Overall, however, they weren’t seeing the dynamics of the boom years of 2015, 2016 and 2017.

Now, some of them are starting to sense a boom.

“The market is really hot right now and it’s not slowing down,” said Vancouver real estate agent Steve Saretsky. “Most of the froth is in the single family housing market. It’s insanely competitive and comparable to 2016. The condo market is much more balanced though, and buyers can take more time to sift through the inventory.”

“Single family inventory for sale is near record lowest on record. If you’re looking for a house under $2m, there’s 1.6 months of supply. That’s insanely tight and is creating bidding wars. People are seeing prices getting bid up, and now there’s a fear of being priced out.”

Marion Chekaluk, co-founder of Ecom Appraisals Inc. said mid-December to mid-January is usually a very slow time of year for the appraisers and lawyers who process real estate transactions.

But in recent weeks, everyone in her office has been “absolutely run off their feet. I’m getting lenders calling constantly. I had three this (Monday) morning, saying ‘a deal is supposed to happen,’ that ‘subjects need to be removed today. And we’re waiting on this report. You saw the property on Friday.’ They’re asking our appraisers not to take a weekend and I’m saying to them, ‘no, you take your weekend. Because if not, you’ll get burned out.”

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