Condo resales are driving Ottawa’s housing market.
In fact, with 2,105 units moved, June sales are up a touch below 2% over the same month in 2018. But resale condos are where the really impressive growth is.
“Increasing by 8.3%, condo resales are the driving force for the upturn in units sold in the first half of 2019,” Dwight Delahunt, president of the Ottawa Real Estate Board (OREB), said in a statement. “Combined residential and condo year-to-date sales of 9,876 show a 1.8% increase from June 2018.”
The price of condos in the city have risen dramatically over the last decade—34%, to be exact—but Delahunt is clear that Ottawa isn’t a speculative market; it’s merely benefiting from strong economic fundamentals.
“This is not a speculation market. Going forward, we anticipate there will be high demand in the foreseeable future due to increasing population and strong employment in the area. We’re pleased to see all levels of government starting to address the supply-side issue, but we feel there is still work to be done. We will be watching the upcoming federal election closely to gain insight as to how the various parties intend on addressing attainable homeownership issues.”
Chris Allard, a broker with Smart Debt Mortgages, has helped finance a lot of resale condos of late and says that, despite the overall health of the Ottawa market, it’s because some housing types are prohibitive, as Delahunt alluded to.
“The prices of the detached homes and semis in the core increased in value quite dramatically, whether in The Glebe or Westboro,” said Allard. “Homes have increased in price, which means people originally looking for smaller homes either don’t qualify for them or they simply don’t want to pay that higher price. It’s brought them back to condos.”
Indeed, according to OREB, 43% of all residential sales in the city last month were between $350,000 and $499,999, and 29% were between $500,000 and $749,999. In the condominium market, most sales were in the $225,000-349,999 range for the third straight month, and they accounted for 55% of units sold.
Ground-related homes aren’t the sole reason resale condos have caught fire in Ottawa, added Allard. Inventory is low and there are few brand new condos coming to market.
“The very few new-construction starts are priced higher and, therefore, all of the existing condos are priced higher,” he said. “What we’ve seen over the last two years is a lot of builders that were originally going to build condos have decided to build rental apartment buildings instead. Builders have five-year plans and a handful of years ago there was a slight decline in condo values because of too much inventory, so this is all a function of a flat condo market a few years ago.”