February Buyers Snap Up Limited Inventory

News Release

 

February Buyers Snap Up Limited Inventory

March 5, 2019

Members of the Ottawa Real Estate Board sold 1,005 residential properties in February through the Board’s Multiple Listing Service® System, compared with 978 in February 2018, an increase of 2.8 per cent. February’s sales included 756 in the residential property class, a rise of 3.8 per cent from a year ago, and 249 in the condominium property class, a decrease of 0.4 per cent from February 2018. The five-year average for February sales is 949.

“February has been a strong month, and with year-to-date unit sales 8% higher in both the condo and residential categories, it is looking very favourable for the spring market,” states Ottawa Real Estate Board’s 2019 President, Dwight Delahunt.

“Days on market continue to decline, and although inventory has fallen to its lowest level in many years, we are still managing to satisfy demand even with 900 fewer listings than this time last year,” he adds. “If we had more supply, our unit sales would be even greater.”

The average sale price of a residential-class property sold in February in the Ottawa area was $466,540, an increase of 8.6 per cent over February 2018. The average sale price for a condominium-class property was $288,354, an increase of 5.6 per cent from this month last year.*

“The Ottawa market is well ahead of inflation in regards to average prices for both condo and residential properties. We are in a comfortable position and remain one of the most affordable markets in the country,” Delahunt points out.

The $300,000 to $449,999 range continued to represent the most active price point in the residential market, accounting for nearly 44 per cent of February’s sales while 26 per cent of residential sales were in the $500,000 to $750,000 price range. Between $175,000 to $274,999 remained the most prevalent price point in the condominium market, accounting for 48 per cent of the units sold.

“If you are thinking about selling, don’t wait – get a jump on the spring market! Now is the time to have a conversation with your REALTOR® who understands the best way to position your home in the market and has the experience to guide you through its complexities,” Delahunt suggests. “This is the type of market you certainly wouldn’t want to navigate without one.”

In addition to residential and condominium sales, OREB Members assisted clients with renting 342 properties since the beginning of the year.

* The Board cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Price and conditions will vary from neighbourhood to neighbourhood.

Advice from a Realtor: Buying Investment Property? Do your homework

Many Canadians dream of owning a second property or several properties as an investment. Renting spaces out as commercial or residential areas can generate a substantial income over time. Among the many options, individuals can invest in second homes, townhouses, condos, duplexes, rooming houses or multi-unit residential buildings.

There are many things to consider when buying income-producing properties, so it’s important to do your homework.  The following tips are provided by Patrick Morris, the leader of the Morris Home Team and a Broker with Royal LePage Performance Realty:

Check your finances

Before you invest in a property, be sure to meet with a mortgage broker or an investment-friendly bank. Most buyers don’t realize that a 35 per cent down payment is required to purchase an income property.

While you can sometimes finance your down payment by refinancing your current residence with a line of credit or other investment income, it’s important to check in with your mortgage broker or bank because they may be able to provide alternatives. Some buyers like to use private lenders or ask the owner(s) to hold a first or second mortgage known as a ‘vendor take back’ (VTB). In all cases, gather the information and do your homework.

What does the property have to offer? 

When starting out, it’s best to invest in a property in a familiar neighbourhood; it’s important to be comfortable with your location. Knowing what the nearby amenities are really helps sell your property to potential tenants. Most potential tenants want to be within walking distance of public transportation and local services. 

Do your due diligence

When selecting a property to invest in, it’s helpful to do your research online first and then drive by them. For all properties, especially if investing in multiple units, you’ll want to visit it in person and view the unit(s) carefully. Align yourself with a real estate agent experienced in income properties to make this easier.

If you like what you see, make an offer conditional on a building inspection, obtaining financing and mortgage appraisal, reviewing the leases, income statements, expenses, fire retrofit certificate (if applicable) and any other items your agent will recommend. Single properties, at this time, do not require a fire retrofit certificate.

Calculate the costs of repairs and improvements needed after the building inspection and present these to the owner. Sometimes they will make an adjustment in the purchase price, unless these items were already reflected in the price presented.

Is it a good investment?

Your real net income (deducting the gross rental income from the expenses, inclusive of mortgage costs) is what determines a good investment or not. If you’re investing in a multi-unit building, determine the capitalization rate (cap rate). If you don’t know how to calculate this, your agent or mortgage broker will assist you. Essentially, the higher the cap rate the better the investment for you.

Understand the Residential Tenancies Act of Ontario (RTA)

When buying a second property, you become a landlord. You’ll have extra responsibilities and you must become acquainted with the Residential Tenancies Act of Ontario (RTA). While you can hire a property manager to deal with the day-to-day workings of the property, you’ll still need to understand and respect the RTA and updated legislation.

 

Patrick Morris

S. Evelyn Cimesa

 

 

New Mortgage Rules

Tighter mortgage rules, which become effective on New Year’s Day, may be driving up the cost of buying a house in Ottawa.

Prices for single family homes jumped 7.3 per cent year over year in November to reach $403,500, the Ottawa Real Estate Board reported this week.

The price hikes reflected in part a higher-than-usual sales volume for November, which helped to reduce the number of available properties. There were 3,212 residential listings at the end of November compared to 3,745 in October and 4,207 in November 2016.

The tightness of the market can also be gauged by looking at how long it took for properties to sell. Houses sold in November had been on the market for an average 48 days, down considerably from 68 days in November 2016.

Starting in the new year, borrowers must demonstrate, among other things, they can still make payments if interest rates rise.

The increase in sales activity in November did little to change the recent pattern that has favoured sellers of homes in the west end of Ottawa.

Ottawa's housing market

Eight of the 10 real estate districts that experienced the biggest price jumps for single-family homes were in a narrow band stretching west along the Ottawa River from Island Park Drive to the new headquarters for the Department of National Defence.

All of these districts reported double-digit increases year over year. The sweet spot, from the sellers’ point of view, was Carlingwood-Westboro (the Woodroffe Avenue to Churchill Avenue area) where the benchmark price for single-family homes jumped 12.3 per cent to $757,700.

Not only was that the largest increase among the city’s 46 real estate districts, but Carlingwood-Westboro is now solidly entrenched as Ottawa’s third most expensive behind Rockcliffe ($1.5 million) and New Edinburgh-Lindenlea ($770,600)  — the two districts most popular with diplomats and senior mandarins.

Benchmark prices are based on an index that reflects multiple housing characteristics such as roof type, number of bathrooms and age of the property, and offers a more consistent view of underlying trends than a simple average.

The smallest increases in benchmark prices for single-family homes occurred in the east, along the Highway 174 corridor from St. Laurent Boulevard to Cumberland. For instance, in Blackburn Hamlet, recognized as a bedroom community for DND employees, the benchmark price for single-family homes edged up just 2.3 per cent to $389,000 in November compared to a year earlier.

This made it one of 12 districts in which benchmark prices were below $400,000. The least expensive: Carlsbad Springs, where single-family homes sold for $332,700, slightly below comparable properties in Bells Corners.

The market for condominium sales in November was markedly different from the one for single-family homes. According to board data, which tracked sales using a simple average (rather than benchmark prices), real estate agents sold nearly 300 condos in November for an average of $257,200 — down 7.6 per cent year-over-year.

(For context, average prices for residential properties sold in November across Ottawa were up 3.2 per cent to $418,350.)

There were sharp variations by region. The average price for a condo sold in the east end surged by 32 per cent year over year to $333,000 while in the west, the average price actually dropped 2.3 per cent to $300,600 over the same period.

Downtown, the average price for a condo sold in November was $359,000 — down 17 per cent — while in the south, the price paid was just below $230,000, about the same as a year earlier.