Ottawa’s hot housing market continues

Impending mortgage rate hike driving sales

By DOUG HEMPSTEAD, OTTAWA SUN

It’s not just the weather that’s hot this spring, the housing market is way ahead of where it normally is this time of year.

Agents who are members of the Ottawa Real Estate Board sold 1,499 residential properties in March, compared to 1,161 in March 2009. That’s a 29.1% increase.

“The spring market kicked off early and strong this year,” said board president Pierre de Varennes, who attributes the success at least partially to the weather.

Re/Max real estate agent Ken MacGowan has been having a banner year.

He said there are “a couple of reasons” why property sales are up, but one stands out.

“The mortgage rate is widely expected to jump and people want to get locked in now before it does,” said MacGowan, adding the perception is that will happen in July.

“That’s the single biggest reason,” he said.

Other factors MacGowan is hearing include the impending HST, which will hike the transfer costs on some home purchases.

He also suggested media coverage of Ottawa’s hot property market is fuelling interest.

“Maybe there will be a lull after July, but I don’t think so. We have a very good economy in Ottawa right now. Even though homes are around $300,000, that’s still quite affordable when you look at other places,” said MacGowan.

The hot sales trend has been going on all year — February numbers were up over last year as well. OREB members sold 1,118 residential properties in February compared with 787 in February 2009, an increase of 42.1%.

The average price of residential properties is up as well over last year. Looking at all properties — including condos — the average price of a March sale was $329,767 — an increase of 15% over last year.

It’s a seller’s market, said de Varennes.

“Inventory is lower than at this time last year, but has begun to increase slightly in recent months,” he said.

Of the 1,499 properties sold last month, 327 were condos. All these figures represent only homes sold by board members through the Multiple Listing Service.

Housing Market Outlook 2010

The worst recession since the Great Depression had a serious impact on housing performance during the first quarter, with home sales down 27 per cent nationally, compared to 2008 figures. Consumers adjusted to new market realities—including buyer’s market conditions—as the supply of homes available for sale rose and values dipped. Hardest hit were markets in Greater Vancouver and Sudbury, where the number of homes sold declined 40 per cent; Calgary slipped 35 per cent; and Victoria, Greater Toronto, St. Catharines, Regina, Montréal, London, Kitchener- Waterloo, Halifax-Dartmouth, and Hamilton-Burlington were off 2008 figures by more than twenty per cent.

Yet, after one of the most difficult first quarters in Canadian housing history, the market miraculously changed course. Rising like the phoenix from the ashes, real estate activity across the country gained momentum. First-time buyers, feeding on low interest rates, ventured into the market, taking advantage of greater affordability levels. Move-up purchasers followed in tandem, trading up to larger homes and/or better neigbhourhoods.

By year-end, housing sales had recovered in virtually all residential housing markets across the country, led by a 45 per cent increase in Greater Vancouver. Two markets, including Ottawa and Québec City, hit historic highs in residential sales, reporting more than 15,500 and 14,000 units sold respectively. Last but not least, housing values posted new records in 15 of the 23 markets surveyed, including St. John’s with an upswing of 15 per cent. Other noteworthy developments include shattered price benchmarks in Greater Vancouver at $600,000; Toronto at $400,000; Ottawa at $300,000; and Québec City and St. John’s at $200,000. Nationally, residential housing sales are expected to top 465,000 units by year-end 2009, a seven per cent increase over one year ago; while housing values climb five per cent to $318,000, up from $303,594 in 2008.

The bounce back of 2009 will long be remembered for its dramatic swing in residential housing sales across the country. While the affects of the recession will continue to linger in some areas, the worst is clearly behind us. The stock market has rallied, while not enough to return it to its post-recession high of 15,000. After several consecutive quarters of negative GDP growth, a small gain was reported in the third quarter of 2009....

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