After a spring that seemed to drag on for too long, summer arrived fast and furious. Following months of strict lockdown measures and a laundry list of public health guidelines that put Canada’s economy on pause, the public’s patience is paying off as the tide begins to turn in the province and across the country. Now that things are beginning to reopen and resume activity, has the real estate recovery begun as well? The numbers are certainly looking favourable in the Ottawa real estate market.
The nation’s capital was one of many housing markets that saw a temporary plunge in activity, with home sales cratering as much as 60 per cent in April, but the keyword is temporary.
The latest data suggest a huge rebound in almost every facet of this local market, from listings to resales to mortgage payments. Will summer continue to be a seller’s market as anticipated before the crisis? Slap on some sunscreen and let’s take a peek at the red-hot Ottawa housing market.
Summer in the Ottawa Real Estate Market
Our worst fears about the impact of the public health crisis upon the real estate industry have yet to be seen. Some may suggest that this is due to the commendable work of Realtors nation-wide, who continued to work during the pandemic and swiftly adapted to changing conditions (admittedly we, at RE/MAX, are a little biased). Whatever the case may be, the COVID-19 shock did not result in a perpetual collapse in the Ottawa real estate market – or even within other major Canadian markets.
Although industry experts have been cautious in their predictions on how the virus outbreak has and will continue to impact home-buying and selling, the pandemic appears to have only put a temporary pause to Ottawa real estate activity. As early as May, the Ottawa Real Estate Board (OREB) reported that the average sale price of a residential-class property surged 11.2 per cent in May compared to the same time a year ago, to an average sale price of $548,140.
The average sale price of an Ottawa condo was $343,589, up 15.5 per cent at an annualized rate.
Analysts note that the renewed activity likely stems from the pent-up demand that existed before the shutdown. When you factor in Ottawa’s stable employment levels, as well as support from the federal government, the nation’s capital had been viewed as a stable investment throughout the chaos. There is no indication that things will change during the dog days of summer.
Does this suggest a strong summer or a resurgence in the fall? The immediate future is uncertain, warns the Canada Mortgage and Housing Corporation (CMHC) in a recent report.
“As the virus is overcome, cities will bounce back, but there is significant uncertainty with respect to the path and timing of the recovery,” said Aled ab Iorwerth, deputy chief economist at the CMHC, said in a June report on the housing market outlook in Canada’s largest cities. “Rapid elimination of the virus and a resurgence in global trade will clearly be of benefit while further waves of the virus will put negative pressure on the economy.”
In addition to sales activity and prices, another factor impacting the real estate industry will be the remote work trend. In recent months, many professionals have been working from home, and a recent Angus Reid Institute study found that most Canadians working from home believe they will continue to do so, even after the pandemic is over. Real estate agents might be expected to accommodate this prevalent expectation, with home seekers adding “home office” to their must-have list.
Some experts are suggesting that employers may be requested to fund additional home office space or even partially pay for the cost of renovations. If the work-from-home practice remains embedded in society, real estate – in Ottawa and elsewhere – will need to accommodate this.
Showers in 2021 to Bring Flowers in 2022?
With talk of a possible second virus wave and various contrasting predictions for the nation’s recovery, there remains a great deal of uncertainty regarding the months ahead. What we do know is that borrowing costs are expected to remain at historical lows as the Bank of Canada (BoC) will keep interest rates at near-zero for the foreseeable future. Further, if social distancing guidelines continue and another lockdown is necessary in the future, the real estate industry has shown that it is ready to adapt at a moment’s notice.
Realtors have been quick to adjust to the new real estate landscape, leveraging technology and utilizing digital tools to service their clients. When they did have face-to-face meetings, strict measures were met to ensure public safety.
CMHC has prepared its early estimates for 2021 and 2022. Canada’s top mortgage insurer forecasted that the average price of residential MLS transactions in Ottawa would range between $406,000 and $460,000 next year. Furthermore, the housing agency said average prices would increase to between $415,000 and $490,000 in 2022. Put simply, a possible drop next year followed by a rebound in the following year.
It all boils down to this: even if Ottawa’s hot real estate market were to take a dip this year in the wake of a possible second wave, average home prices are likely to continue their steady increase on a long-term trajectory.
Real Estate Roundup 9.25.20 – Real Estate Daily Beat
Real Estate Roundup
- SL Green and Jacob Chetrit have resolved their dispute over the broken contract for the Daily News Building. (TRD)
- Global pricing and demand for office space will take almost five years to recover from the damage wrought by the pandemic, according to a report by Cushman. Vacancies worldwide are expected to peak at 15.6% in 2022, with about 95.8 million SF of space emptying over the next two years. That’s more than during the 2008 financial crisis, when tenants abandoned 85 million square feet of offices. (Bloomberg)
- Barclays is set to ramp up staff numbers in New York next month, asking a fresh contingent of employees to be “primarily office-based”, as the UK lender prepares to U-turn on its plans to bring more people to its Canary Wharf headquarters. (FinancialNews)
- Mizuho Financial Group plans to trim office space in New York and London in anticipation that some staff will keep working from home even when the coronavirus pandemic is over. (Bloomberg)
- When Everybody’s Working At Home And The Magic Is Gone. (NPR)
- Brookfield Properties and Namdar Realty are separately requesting they be allowed to give up their J.C. Penney-anchored malls to special servicers to avoid loan foreclosure. The action is known as a “deed-in-lieu.” Mall owners most likely to default are those with CMBS debt. Such loans are difficult to restructure because of covenants bondholders have with servicers. (TRD)
- Spring Education Group has signed a 20-year lease for 34,500 SF at Albanese Development’s 556 West 22nd Street. The group’s BASIS Independent Schools will occupy the entire three-story building to serve students in grades 6 through 12. (TRD)
- Although Zillow has long denied it wants to become a real estate brokerage, the changes to its iBuying program mean it is doing just that. Previously, Zillow worked with local real estate agents to complete both ends of the transaction, but now it will instead use its own employees who are licensed real estate agents. (MotleyFool)
- Co-living firm Common has raised $50 million in new venture capital this month. Earlier this summer, competitor Juno Residential launched with $11 million in venture funding. (WSJ)
- New York Community Bank and Signature were among the top five most-active lenders in New York in the first half of the year, and almost all of their portfolios are tied to the area. With retail and apartment vacancies rising and rents falling, and with the prospect of employers cutting their office space looming, the question is whether the hundreds of millions of dollars the banks have set aside for commercial-property loan losses will be enough. (Bloomberg)
- Blackstone’s China Real Estate Head Tim Wang leaves after 10 years. (Bloomberg)
- Blackstone Group closed on the largest real-estate debt fund ever. The private equity firm began raising money for the fund in the spring of 2019, and ultimately took in $8 billion. Fundraising got a boost after Covid-19, partly because interest rates fell, increasing the appeal of relatively high-yielding real estate debt. (WSJ)
National Real Estate Deal Roundup 9.25.20 – Real Estate Daily Beat
National Acquisitions Roundup
- Amazon has acquired 550 Army Navy Drive in Pentagon City, Virginia from the Blackstone Group for $148.5 million. The tech giant plans to demolish the existing Marriott hotel and utilize the 1.5 acres of land as part of its second headquarters. With the deal, Amazon now owns the entire 11.6-acre PenPlace. The site was always part of the company’s HQ2 plans, but the hotel remained the last holdout, and it appeared the company would just build around it. (CO)
- A consortium of South Korea’s Hana Alternative Asset Management has signed a contract to acquire a 38-story office tower in downtown Seattle for around $686 million. Skanska USA’s newly-constructed Qualtrics Tower spans 701,000 SF. Tenants include Qualtrics, Indeed, Dropbox, and co-working firm Spaces. (KI)
- Invictus Real Estate Partners has purchased the remaining 90 percent stake in The Waypointe at 515 West Avenue in Norwalk, Connecticut from Carmel Partners. The two-building complex, which includes 56,000 SF of ground floor retail and restaurant space, opened in 2015. Its apartments are currently 93 percent occupied, while the retail space is 74 percent leased. The deal valued the asset at $157 million. (TRD)
- As part of its ongoing industrial real estate expansion, PGIM Real Estate has acquired a 40 percent interest in a 5.4 million-square-foot, 12-complex industrial portfolio valued at $700.5 million. PGIM acquired the stake in the portfolio through a recapitalization of the interest in a JV with partner IAC Properties and a subsidiary of Perlmutter Investment Company. At that valuation, the deal works out to a 4.7 percent cap rate. The portfolio includes 30 industrial properties spread throughout the 12 complexes, which altogether are 97 percent leased. (CO)
- July Residential and Firm Capital Apartment REIT have acquired North Pointe at 5735 29th Avenue in Hyattsville, Maryland from FCP for $37.5 million. The 19-building apartment community contains 234 units. (CO)
National Leasing Roundup
- Netflix has signed a 171,000-square-foot office lease in Burbank near major competitors like Warner Brothers and Walt Disney. Netflix’s new space is at 2300 West Empire Avenue near the 5 Freeway in Los Angeles County. Earlier this month, CEO Reed Hastings told WSJ that he expects employees back in the office once a coronavirus vaccine is available. (CO)
- Logistics and storage firm Mega Lion has signed a 132,423-square-foot lease at 13021 Leffingwell Road in the Mid-Cities submarket of Los Angeles County. Golden Springs Development owns the property. Asking rent on the five year lease was reportedly $0.90 per SF, triple net. (CO)
Real estate sales set record in Powell River – Powell River Peak
Residential real estate sales in the Powell River region in August 2020 were significantly higher than those of the previous year.
According to Powell River-Sunshine Coast Real Estate Board president Neil Frost, August featured a significant year-over-year gain and marked a new sales record for that month.
“Home sales in the region continued to rebound in August, smashing the previous record for the month set back in 2005,” said Frost. “New supply is also on the rise but is not keeping pace with demand. As a result, the market has tightened significantly and the imbalance between supply and demand is putting upward pressure on prices in the region.”
In August 2020, the average single-family home sold for $464,655 and was on the market for an average of 60 days. In 2019, the average single-family home sold for $394,763 and was on the market for 70 days.
Frost said August statistics regarding vacant land speak to how busy the market has been, and that more people are turning to building. Some people coming from out of town want new properties or are not finding what they want, according to Frost.
He said the median house price of $419,000 is probably accurate. He said that is the going price of a decent family home in Powell River.
“We have seen a bit of a bump here over these past couple of months,” said Frost. “The activity has kind of pushed prices up. It’s still active and there were quite a few sales in the higher price range in August, which really pulled average prices up.”
In terms of single-family homes, in August 2020, there were 48 homes sold, valued at $22,768,111, compared to 28 homes, valued at $11,053,358, in August 2019.
There were three single-family mobiles and manufactured homes, valued at $598,900, sold in August 2020, compared to five units, valued at $668,000, in August 2019.
For single-family condos, apartments and duplexes, there were four sold in August 2020, valued at $1,178,200, compared to eight, valued at $2,090,500, in August 2019.
Totals for residential properties for August 2020 were 56 units valued at $24,545,211, compared to 41 units, valued at $13,811,858, in August 2019.
For non-residential, in August 2020, there were 10 parcels of vacant land sold, valued at $1,761,000, compared to five parcels in August 2019, valued at $363,000.
In terms of industrial, commercial and institutional, there were three units sold in August 2020, compared to no units the previous year.
Frost said Texada Island has been active, with affordability and the lifestyle it offers over there.
In terms of year-to-date residential sales comparisons between this year and last, in 2020, there were 283 homes sold, compared to 274 in 2019.
“In a year where we thought we were going to sell less, we’re pleasantly surprised that we’re on track to do the same kind of sales,” said Frost.
According to the buyer and seller statistics for August 2020, there were 30 local buyers and 25 out of area buyers. Statistics for all of 2020 show 51.1 per cent local buyers and 48.9 per cent out of area buyers.
In terms of sellers in August 2020, 49 were local and 10 were from out of the area. The year’s statistics show 87.3 per cent of sellers were local and 12.7 per cent were out of area.
Apple Watch Series 6 review – TechCrunch
After long-term care, Quebec private seniors residences a growing COVID-19 concern – Pipeline News
Radiation levels on Moon 2.6 times greater than ISS: study – FRANCE 24
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Richmond BBQ spot speaks out about coronavirus rumours Vancouver Is Awesome
- News23 hours ago
Ontario sees 409 new COVID-19 cases, rolls out $1B updated testing and contact-tracing plan – CBC.ca
- News19 hours ago
CP Holiday Train won't roll across Canada this year due to pandemic – CBC.ca
- Economy21 hours ago
If Donald Trump drags the U.S. economy down, Canada's economy is going along for the ride – Toronto Star
- Business23 hours ago
Tech stocks lift Wall Street as economic rebound slows – Reuters
- Art20 hours ago
Pandemic-inspired art exhibit – News 1130
- News22 hours ago
U.S. cosmetics chain Ulta scraps Canadian expansion plans – CBC.ca
- Sports19 hours ago
Nate Pearson active for Blue Jays vs. Yankees, expected to pitch in relief – Sportsnet.ca
- Economy11 hours ago
Why stock markets are up 44% amid the worst economic contraction in history – CBC.ca