Construction in the nation’s capital is on fire.
According to Ameera Ameerullah, CEO of Canada Mortgage & Financial Group, the firm has been lending on a lot of construction projects this year.
“We are currently facilitating about $47mln in land development and construction financing in Ottawa presently,” she said. “It ranges from land assembly and construction for single-family detached bungalows to a 76-unit low-rise condominium development in three phases, and land assembly for a retirement facility and golf course.”
Given that Ottawa is an historically stable market, and one that’s growing, Canada Mortgage & Financial Group’s presence there isn’t surprising.
“It’s a growing community in Canada, specifically in Orleans, which is up and coming with a stable job market due to the federal government,” said Ameerullah. “Orleans has one of the strongest household income levels in Canada, and the rental vacancy has been close to 2% over the past 10 years.”
Indeed, by all accounts Ottawa’s real estate market is on fire. According to Chris Allard, a broker with DLC Smart Debt, the growth in new construction is mostly occurring in the city’s east, south and west ends.
However, it’s creating frenzy for borrowers, brokers and lenders.
“We have some clients on waiting lists to even be able to put in an offer with a builder,” said Allard. “A builder only releases X amount of properties for a certain model and there’s already a waiting list. Those aren’t going to multiples, but you hope to be the next guy to actually put an offer in. I have clients who have slept in sleeping bags outside a sales centre just to put their names on a list.
“A lot of people need preapproval letters for builders, as well.”
Ottawa’s resale market is replete with multiple offer situations and, inevitably, broken hearts. Comparing it to what occurred in the Greater Toronto Area a couple of years ago, Allard says it’s ideal for sellers but tough on buyers.
“It means the parties involved are all a bit more stressed,” he said. “The borrowers are stressed because perhaps they did not put any financing conditions on their offer; the mortgage professional is stressed because if the borrower did put in a financing condition, then in a lot of cases the financing condition is very short, which means we need to be quick at getting an approval. That means we add pressure on the lenders to do everything quickly, but when there’s a hot market lenders are busy too, so the pressure goes down the chain from the borrower to the mortgage broker to the lender.”