During Ottawa’s last real estate boom a decade ago, an inventory glut resulted in a slew of developers jumping ship. Lesson learned, Ottawa’s real estate market is once again profitable.
“We’re definitely at our strongest in a decade because inventory is low,” said John King, license partner of Engel & Völkers Ottawa Central. “Ten years ago was a strong market and there were going to be a lot of new condo starts in Ottawa, but that negatively impacted the condo market. When all the new condos started, we had a surplus and it drove prices down, and then all the developers that were going to build in Ottawa ran with their tail between their legs. They either sold lots to other builders or never got started.”
Low supply and heavy demand have conspired to catapult prices, and in a city with strong employment prospects and, therefore, above-average salaries, homes usually sell well over asking. King noted that about 50% of properties sell either at asking or higher, but he admits it presents a challenge for buyers.
“I’ve had personal experience with seeing some of my listings sell to some of the tech executives who have been bidding significantly on the properties to secure them, and it’s driven prices higher,” said King. “Homes that used to sell for $25,000 over asking are now going for anywhere between $50,000 to $200,000 over asking. That happens with the younger, deep-pocketed professionals. The tech industry here secures above-average income and there are also a lot of senior government people. Even the young lawyers working for justice departments earn incomes well north of $100,000 a year. These people can all get into the market.”
According to an Engel & Völkers Americas’ Spring Market Report, Ottawa’s population is growing 8.8% per annum, placing ahead of the national rate. The average selling price of an Ottawa condominium unit is $307,659, which is up a whopping 14.3% over April 2018. Ground-related product sells for 7.4% more than it did in April 2018, with an average price of $488,729 in 2019.
“Ottawa still has good value and it’s well under the Canadian average,” said King. “We have a great economy and we have secure employment, which are great trends for real estate. Coupled with low interest rates, the foundation for Ottawa’s real estate market is very strong.”
For the most part, B-20 isn’t having the same effect in Ottawa that it’s had in Vancouver and Toronto. While most housing is affordable, it is sometimes difficult for entry-level buyers.
“They probably wouldn’t be able to purchase unless they have some support, like from the bank of mom and dad,” said King. “It’s usually in the form of financial support for a down payment or it’s cosigning.”