Sales of homes in the Ottawa market have seen a slower start to spring this year.
Ottawa Real Estate Board reports that its members sold 1,511 homes in March compared to 1,654 a year earlier, a decrease of 8.6%. The residential class saw the largest decline (12.4%) with 1,136 sales, while condo class home sales totaled 375 (down 5% year-over-year).
“Lack of inventory is responsible for March’s deficiency in residential unit sales,” states Ottawa Real Estate Board’s President, Dwight Delahunt. “This tightness of supply is manifesting in significant reductions in DOMs (days on market) and properties selling very quickly. Residential DOMs are down 14%, and condo DOMs are down 36% from last year.”
In some parts of the market, multiple offers are prolific and selling prices above-asking are more common.
“A major factor contributing to the lack of housing stock is the shortage of quality options for those who might list their homes. Move-up sellers feed the market for first-time homebuyers. Another issue which adds to a seller’s reluctance to put their home on the market is the B-20 stress test which affects their purchasing power,” Delahunt says.
Population growth equals price growth
With the Ottawa population growing 8.8% year-over-year, Delahunt says that increased demand with limited supply can only mean one thing for prices.
“Prices will continue to be pushed upwards – it’s a simple and fundamental economic principle. Although we appreciate the recent measures the federal government has taken towards affordable homeownership, all three levels of government need to work together at implementing mechanisms that will also restore the supply side of the market,” he urges.
The average sale price of a residential-class property sold in March in the Ottawa area was $480,143, up 7.2% year-over-year, while for a condominium-class property it was $290,181, an increase of 5.2%.
Condo-class homes in the $225,000 to $349,999 price range are particularly in demand and under-supplied.
“The condo units in the entry-level range are near depletion as first-time homebuyers are trying to get into the market at the lowest possible price. Moreover, previous renters may have been pushed into condo ownership with rental vacancy rates in Ottawa at less than 1%. If there were concrete incentives for investors to purchase properties to lease or develop purpose-built rentals – it could certainly stimulate the rental market,” Delahunt concludes.