Ottawa Condominium Outlook
Ottawa is making headlines across Canada as the condominium market has been gaining momentum recently as we enter the fall housing market. CFRA 580 spoke with Chelsea Hamre to get her take on the current market conditions.
Earlier this week RE/MAX Canada published their findings related to condo sales across Canada. Stats found that although condo pricing and sales had declined year to date, there are signs of optimism and momentum heading into the fall market. Number of sales dropped just over 17% compared to 2022. expectation is that affordability will play a factor and push more buyers toward condominiums as a more affordable option.
The following was originally published on remax.com and is the market outlook for Ottawa.
"Homebuying activity in Ottawa’s condominium sector is gaining momentum heading into the fall market, with affordability and lifestyle the primary drivers once again. Year-to-date average price remains off year ago levels at just under $432,600, down 5.5 per cent from the $457,965 reported during the same period in 2022. Overall condominium sales contracted by just over 17 per cent between January and August, although monthly sales have been consistently ahead of the same period reported in 2022 since May. Ottawa’s housing market traditionally experiences an uptick heading into the fall market, but September’s Bank of Canada announcement to pause on rate hikes yet again, combined with lower housing values year-over-year have provided greater impetus in the marketplace.
While higher mortgage rates and stringent borrowing rules continue to weigh heavy on buyers, especially those purchasing their first home, those that qualify are considering a condominium as a first step towards homeownership. Buyer traffic has increased in recent weeks as more listings come on stream, which is a trend that is expected to continue in the coming months. Many of the buyers shopping in today’s market are already pre-approved, which has provided greater stability for both those buying and selling. For buyers who are downsizing, many already have significant equity available and those that do require a mortgage are typically finding that the mortgage rate they’ve been paying on homes purchased or refinanced in 2018 and 2019 are not as big a leap.
After peaking in early 2022, condominium values have softened, with prices comparable to late 2021 levels. Buyers are heading into the market with the mindset that the worst is behind us, and as a result, confidence is on the upswing. While the best deals were likely those condominiums that were scooped up in the third and fourth quarters of 2022, there are some opportunities in the marketplace. Balanced conditions currently exist, with the greatest activity between the $500,000 and $550,000 price point. First-time buyers, many of whom are professionals, are leading the charge, sparking sales in suburban areas such as Orleans, Barrhaven, and Kanata and the urban core. A shortage of available inventory in exists in the suburbs, especially for those looking at stacked condos, as turnover is few and far between. Greater availability exists in the downtown core for one-bedroom apartments if buyers are willing to compromise on square footage. The supply of two-bedroom condos under $600,000 remains tight. Downsizing buyers tend to spend between $650,000 to $750,000, but often find themselves opting for properties closer to the $750,000 price point with better amenities. Maintenance fees and condominium boards have become increasingly important in today’s condominium market, with the status certificate taking on new meaning for buyers seeking insight into the building’s status, management and financial health.
New construction has slowed considerably over the past year, with fewer new condominium developments coming to market. Many buildings that were initially planned as condos have shifted to rentals as demand for rental units has soared. A one-bedroom apartment is leasing for $2,058 per month, up 11 per cent from one year ago, according to Rentals.ca, while two-bedroom apartments are now commanding $2,531 per month, up 12 per cent year-over-year."
Interview With Ottawa Business Journal
Chelsea Hamre was interviewed by the Ottawa Business Journal to discuss the findings of this report and her own personal experience in the Ottawa Real Estate Market. Find the full article written by David Sali here: https://obj.ca/ottawa-condo-sector-gaining-momentum-re-max/
"Condominium sales were down 17 per cent in Ottawa in the first eight months of 2023 compared with a year earlier, but the sector is gaining momentum as the cost of borrowing has risen and buyers look to condos as a more affordable option to enter the housing market, RE/MAX Canada says.
A total of 2,454 condos changed hands in the capital between January and the end of August, down from 2,964 in the same period in 2022, the national network of real estate agents and brokers said in its annual condominium report released Tuesday.
As sales have declined, so have prices. RE/MAX says the average sale price for a condo in Ottawa in the first eight months of 2023 was $432,557, a 5.5 per cent decrease from the previous year.
Still, the company says the condo market could be poised for a bounceback to close out the year.
“Ottawa’s housing market traditionally experiences an uptick heading into the fall market, but September’s Bank of Canada announcement to pause on rate hikes yet again, combined with lower housing values year-over-year have provided greater impetus in the marketplace,” RE/MAX said in a news release.
“While higher mortgage rates and stringent borrowing rules continue to weigh heavy on buyers, especially those purchasing their first home, those that qualify are considering a condominium as a first step towards homeownership. Buyer traffic has increased in recent weeks as more listings come on stream, which is a trend that is expected to continue in the coming months.”
Ottawa Real Estate Board president Ken Dekker said there is “still huge demand” for condominiums because of their lower price point.
The average price of a freehold-class property in Ottawa was nearly $710,000 in August, while the average condo changed hands for about $425,000.
“Obviously, interest rates and the (mortgage) stress tests are making it very, very tough on a lot of people,” Dekker said.
Condominium sales volumes were consistently ahead of last year’s pace throughout the summer but fell off in September, with transactions down four per cent from the previous year, according to OREB.
Meanwhile, the average sale price dipped 3.4 per cent last month compared with September 2022.
At the same time, RE/MAX said sales activity in higher-than-average price ranges remains robust, especially brisk in the $500,000-to-$550,000 bracket. In addition, the company said the “supply of two-bedroom condos under $600,000 remains tight.”
The report said first-time buyers, particularly young professionals, are “leading the charge” in Ottawa, sparking an uptick in sales in suburban areas such as Barrhaven, Kanata and Orléans as well as in the downtown core.
“Downsizing buyers tend to spend between $650,000 to $750,000, but often find themselves opting for properties closer to the $750,000 price point with better amenities,” the report added.
Dekker said Ottawa’s condo inventory remains tight due in part to a lack of new construction as builders pause projects in the face of rising material, financing and labour costs or convert developments that were originally planned as condos into rentals.
Even if inflation begins to level off and the Bank of Canada cuts interest rates, it won’t necessarily make condo units more affordable, he added.
“It’s all a supply issue,” Dekker said. “We’ll just see prices rise quickly if interest rates go down.”
Chelsea Hamre, a REALTOR® with RE/MAX Affiliates Realty in Orléans who helped author the new report, agreed.
“Definitely, as inventory gets tighter, we will see pricing go up,” Hamre said, adding she expects condo sales to remain steady heading into 2024."