OTTAWA —
Getting into the Ottawa Real Estate market has been a bit like being a contestant on ‘The Amazing Race’; you need stamina, a strong stomach, and a good team.
We all know someone who has been in the multiple offer, bidding war, paying-well-over-asking scenario.
That may lead an investor, someone looking for a real estate purchase to generate income, to believe the Ottawa market is overvalued.
Taylor Bennett, a broker with Bennett Property Shop realty, spends a lot of his time educating buyers on real estate values in the nation’s capital, and he explains the recent spike of 20 per cent growth is a market playing catch up.
“When you look at the annual growth over the last 10 years, the Ottawa market looks to be making up for a five-year span when the growth was under three per cent,” says Bennett.
“While the Ottawa market won’t continue to grow at the current 20 per cent rate, even Ottawa’s average growth of 6.7 per cent makes the local real estate market a solid and secure investment option.”
Bennett is a regular contributor on CTV’s News at Noon and regularly hosts “The Bennett Real Estate and Wealth Show” on Newstalk 580 CFRA.
“Investing your money into anything can be risky: stocks, start-up, mutual funds,” explains Bennett.
He says that Ottawa has proven to be “one of the most reliable real estate markets in North America supported by an extremely predictable and stable economy.”
“This stability makes the local real estate markets an excellent option when it comes to investing your money.”
Bennett says investors need advice, the right plan, an understanding of the market, knowledge of costs, a sense of expectations and risk tolerance. He’s prepared these tips to help:
Last 10 Years in Ottawa
Average Annual Price Growth:
2011 5.0%
2012 2.4%
2013 1.6%
2014 1.2%
2015 1.6%
2016 1.2%
2017 5.5%
2018 3.8%
2019 8.4%
2020 19.9%
10-Year Average = 5.3%
65-Year Average = 6.7%
Investing Made S.I.M.P.L.E.
S – Seek expert advice
I – Identify your goals
M – Money
P – Property type
L – Level-headed approach
E – Exit strategy
Seek Expert Advice
Real estate advisor
Tax accountant
Mortgage specialist
“To make the best choices, you need the best information and advice. It may seem obvious but before you start making any concrete plans be sure to seek out experts or people who have successfully invested in real estate to get advice based on real-life experience. While it may be tempting to get your info from an online blog or article, everyone starts in a different position, and each investment plan should be personalized based on the individual. Everyone has a different tolerance for risk, different finances, and different goals.”
Identify Your Goals
Increase monthly cash flow
Equity growth
Subsidize income
“Defining what it is you want to achieve from the start is essential. If you don’t know where you want to be, how will you know how to get there? Identifying your main goal allows for the rest of the plan to fall into place. This will help narrow down potential properties, target specific neighbourhoods or areas, etc.”
Money: How Much Will You Need?
Initial down payment
Property improvements
Vacancy, advertising, etc.
“As cliché as it is, you need to spend money to make money, but it’s a cliché for a reason: it’s true. Investing in real estate can be costly but not all investments require the same up-front costs. At minimum, the vast majority of real estate investments require a 20 per cent down payment. The most common ways of funding this down payment are from savings, a loan, an inheritance, or a HELOC (home equity line of credit).”
Property Type
Muli-Unit Dwelling
Pre-Construction
Residential or Condo
“Different styles, and types of properties, will help deliver certain investment goals, and each comes with its own level of risk, upkeep, upfront & on-going costs. Once you have defined your goals and finalized your finances, narrowing down the styles of properties becomes far easier.”
Level-headed Approach
Put the emotions aside
Let the numbers decide
“Many first-time investors often apply the same approach they took when they bought their personal residence, which is a highly emotional decision. The same approach isn’t effective when it comes to investing. Your personal tastes or preferred style of home aren’t important when buying an investment property. Not only is it vital to stay within your financial means, reminding yourself that you’re not the ‘end user’ can help make the decision easier.”
Exit Strategy
When to sell?
Additional taxes?
Identifying opportunity costs
“Investing in real estate should be planned as a long-term investment, but there comes a time to sell and move on to the next. Having a set timeframe is important, but assessing your investment should be an on-going task to not only ensure the investment plan is progressing but to help identify other opportunity costs in the market.”
“Along with identifying the correct time to sell, savvy investors should also have a firm grasp of the costs of selling: additional taxes, capital gains tax, real estate or legal fees, etc.”
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.
