The real estate market in Ottawa is still a “sellers market”. Insufficient inventory (low number of properties for sale compared to the number of buyers looking) is definitely pushing up house prices.
However, it does appear that changes by 3 non-Ottawa governments have affected our market as well. (Non-Ottawa governments meaning measures intended to exclusively or primarily affect other parts of the country.)
We’ve charted the average sale-to-list-price ratio for each of freeholds, condos and rentals listed on the MLS for the past 5 years and the results are quite dramatic.
In every case we see major changes to the price ratios after each of the changes by other governments. (Technically the federal government isn’t an “other” government, but their regulations were aimed at Toronto and Vancouver.)
Just look at how the prices for Ottawa freehold sales used to be in the range of 96%-98%. Now they’re up to 100%+, and the low in the last 12 months was more than 98%!
The ratio for condos ranged about 95%-97%, and for the past 12 months the lowest has been about 97.5% and it’s currently close to 99%!
Rentals show the most dramatic chart. After the Vancouver tax was introduced the usual dip in sale-to-list price ratio didn’t even dip to 98%, whereas it typically went closed to 96.5%. And since the Toronto tax, and the mortgage stress test, everything has been renting for 100% of asking!
There are always other factors at play of course, and often the factors affect each other which makes this type of manipulation difficult.
For example, with rentals, the 4th chart shows that the number of active listings has dropped from a peak of about 870 in November 2015 to just over 200 each month for the past year.
It could be that more people are renting through something like Kijiji.
Or, it could mean that the unintended consequences of the extra tax in Vancouver and Toronto has shifted people to buy in Ottawa, pushing up the prices of homes, and reducing purchasing options for people in rentals.
And the is a chicken-and-the-egg effect happening. The low inventory is keeping people who want to sell their home and downsize or upsize from listing their homes for sale because they can’t find a home that they want to move into.
As always, be aware that statistics are generalisations. Many homes are selling for more than asking currently – and often for substantially more.
Don’t hesitate to contact us if you’d like more specific information about an area or a particular property.