“You can still afford a home in Ottawa. Maybe this year it will have to be a condo, but, if you do your homework, you can get into the market.”
Our real estate market entered an unusual new phase in April, according to data published Wednesday by the Ottawa Real Estate Board. Unit sales of residential properties plummeted nearly 25 per cent year over year in both urban and rural areas, contributing to a sizeable increase in available listings and more moderate price hikes. Not only were there fewer bidding wars in April, but some properties also received no offers whatsoever, according to brokers.
The average price for an Ottawa residential property resold in April was $895,000, up 12 per cent compared to a year earlier. In the Ottawa Valley, houses sold for an average $644,000, representing a year over year gain of nine per cent. It was the first time this year that urban price gains had outpaced those in the Valley. Indeed, buyers paid a premium to snap up rural properties throughout most of the pandemic.
“It’s a funny market right now,” says Rick Eisert, broker/manager of Royal LePage Team Realty. “We could be reverting to a more normal market.”
By normal, he means a market in which buyers can present offers with conditions, take time to do house inspections and just generally not be pushed into decisions fuelled by panic.
Eisert notes multiple factors have contributed to this “pause” in the market, including rising interest rates, escalating inflation and the Russian invasion of Ukraine.
Yet, despite these negatives, Royal LePage recently forecast house prices in Ottawa would gain at least 10 per cent by year end compared to the fourth quarter of 2021.
While this would represent a substantial pullback from last year’s torrid price hikes, it would still produce sizeable capital gains for current homeowners. Is it realistic to expect this in the face of rising mortgage rates?
Chelsea Hamre believes it is. A sales representative with Hamre Real Estate Team, a RE/MAX Affiliates Realty firm, Hamre sold 27 properties during the first four months this year. She notes about 40 per cent of her sales featured buyers from outside Ottawa, who still view properties in the capital as relative bargains. These buyers have money or substantial house equity already built up.
Yet, Hamre adds, there’s also hope for first-time buyers. “You can still afford a home in Ottawa,” she says. “Maybe this year it will have to be a condo, but, if you do your homework, you can get into the market.”
Part of it is that interest rates, despite the recent half-a-percentage-point rise initiated by the Bank of Canada, remain relatively low. The discounted five-year mortgage rate earlier this week was 3.49 per cent according to Ratehub. While that was up from 1.39 per cent early last year, it compared with 3.19 per cent in the pre-pandemic year of 2019, when rates were considered inexpensive.
Consider what’s involved in buying a condominium now for $500,000 — slightly above the average for Ottawa last month. Assuming a $400,000 mortgage at 3.49 per cent over 25 years, that would cost nearly $2,000 per month. That’s roughly the same amount you would pay for the average two-bedroom apartment in Ottawa.
If interest rates rise another full percentage point, mortgage costs would rise $217 per month, or about $2,600 annually.
For residential properties relying on mortgages, the costs are much more onerous.
Nearly a dozen real estate districts in Ottawa reported average resale transactions in excess of $1 million, while none of the nearly 50 districts had averages below $600,000. That was not true of the Ottawa Valley, where — despite the rapid price gains during the past two years — plenty of properties could be found for less than $600,000. Even so, last month had some big exceptions in Russell ($815,500 average residential price, up 35 per cent year over year), Almonte ($731,000 average, up 28 per cent) and Carleton Place ($707,000 average for a gain of 21 per cent).
That suggests, if we really are returning to a new sort of normality in real estate, it’s unlikely to be uniform across the region.
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.
The Canadian Press. All rights reserved.
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.
The Canadian Press. All rights reserved.
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.
The Canadian Press. All rights reserved.
Alberta Premier Smith aims to help fund private school construction
Sutherland House Experts Book Publishing Launches To Empower Quiet Experts
Quebec won’t fund graphite mine project tied to Pentagon; locals claim ‘victory’
Nurse-patient ratios at B.C. hospitals set to expand in fall, says health minister
N.B. election: Parties’ answers on treaty rights, taxes, Indigenous participation
Nova Scotia NDP accuse government of prioritizing landlord profits over renters
Health Minister Mark Holland appeals to Senate not to amend pharmacare bill
Second-half goals lift defending MLS champion Columbus past Toronto FC
