Following the major trends in the rest of the country, the Ottawa real estate market had a strong finish in 2017 due to a significant increase in sales during December of 2017. According to Ralph Shaw, the president of the Ottawa Real Estate Board, “December saw an increase of 8.4% in the number of units sold in residential sales and 25% in condo sales. This could very well be attributed to the changes in the mortgage qualification rules implemented January 1, 2018.”
What caused the rush of buyers in December 2017?
There was a noticeable increase in sales at the end of 2017, but like in most Canadian real estate markets, it can be attributed to the last minute rush of home buyers trying to get in the market before the new stricter mortgage stress tests and requirements came into effect in January 2018. According to the Ottawa Real Estate Board multiple listing service (MLS), there were 205 condominiums and 566 residential properties, which is a total of 771 total units sold in December 2017, compared to the 711 properties sold in December 2016. This represents an increase of 8.4% increase in residential units, and a 25% increase in condominium sales, and puts it above the five-year average for December sales, which is 687.
The average sale price of a residential unit in December was $434,098, which is an increase of 3.4% over December 2016, and the average price for a condominium was $255,335, which is a decrease of 3% compared to December 2016. Throughout 2017, there was a total of 17,083 residential and condo units sold through Ottawa’s MLS System, which is a 10% increase compared to 2016.
Ottawa market has unique advantage
It’s difficult to know whether Ottawa has an unrealistically inflated market in and out of itself. It’s always a challenge as to when and if the market will balance itself, and even professional economists find it difficult to predict. What we can say for sure though is that Ottawa home buyers are definitely in a better position than Vancouver or Toronto’s home buyers.
In most Canadian real estate markets, we expect to see a slowdown in sales during the first quarter of 2018 due to those aforementioned stricter mortgage rules. However, the Ottawa market has a considerable advantage of its own: comparative affordability. Ottawa’s residential average price lies below the $400,000 mark, which is a gigantic difference between the Toronto or Vancouver markets. Still, we should remain cautiously optimistic regarding the market, because we won’t know the full effects of the mortgage stress tests.
Investors can take advantage of Ottawa’s relatively affordable market by getting into the rental market and catering to a niche demographic. The regular home buyer will have a harder time qualifying for a mortgage in 2018, but it’s not as unreachable as in other large cities. Home buyers who missed their chance to buy in December should be able to save up and qualify for a mortgage during the second half of 2018.