Sometimes I like to know ‘just the facts’ and sometimes I want to understand the ‘why’. I’ve structured this Ottawa market update so that you can first read the facts and stop reading, or if you’re in a more contemplative mood you can continue on to go a little deeper.
Residential Real Estate in Ottawa This Fall
1. Prices are balancing out. We are, at least for the foreseeable future, going back to slow and steady increases (We are up 0.5% from last September). Don’t buy a house thinking you will get your money out or make money in less than two years. After expenses, that will be tough. Work with a 5+ year plan in mind.
2. Conditional offers are back. Even in multiple offer situations we are seeing conditions in offers. Over the last couple of months we have seen financing, inspection and home sale conditions.
3. Good homes are still selling fast. They aren’t going for way over asking price because they are being priced according to what the seller expects, rather than aggressively low to create a bidding war. We are however seeing multiple offers for good properties (maybe 2, rather than 4-10).
4. Almost 30% fewer of you are buying and selling compared to last September. That’s a big change. There is now 3 months’ worth of inventory on the market for freehold homes. That is pretty much a balanced market. It is NOT a buyer’s market. We have seen buyers buoyed by media reports of slow downs lose out on homes because of slow action and excessive demands on sellers. Remember – real estate is emotional so buyers and sellers need to treat each other with respect – the balance (of power) is about even right now.
5. Sellers can’t just slap a sign on the lawn and get their price, and real estate agents cannot be lazy. I use a 4-phase process to ensure that homes not only look fabulous and sell for the most money possible, but that my sellers’ interests are protected throughout the conditional period all the way to and past closing day. I’m all about helping you achieve your goals and that means crossing the finish line and celebrating with you!!
6. Buyers will have higher mortgage payments or less purchasing power but will be less likely to overpay for a home as a result of an emotional bid.
7. Downsizers, you are in luck. Mortgage rates usually don’t affect you much. You will have a less stressful buying experience and may find some wonderful buying opportunities out there.
Why Did Prices Rise So Rapidly in Ottawa?
Over the last two years, low interest rates have fueled an approximately 60% increase in home prices. Most buyers make their decisions based on monthly payments. For example, if you had purchased a home 5 years ago with a 4% fixed interest rate, you could suddenly move up to a larger home for your growing family for the same monthly payment at an interest rate that was less than half of that.
Couple the above with population growth and a housing shortage and you’ve got an easy recipe for price growth.*
Why Are Interest Rates So High?
Fact: Interest rates are not “so high”, they are simply higher than they have been over the last 15 years (which I suppose may seem like a lifetime to a young first-time buyer). In fact, in my example above, the family that bought five years ago and is now refinancing at the end of their mortgage term may have a 1%-1.5% increase in their rate.
So Liisa, What Does This Mean for Me?
- If you are downsizing, do it now
- If you are a renter, it’s always a good time to buy and build wealth. Pay yourself rather than your landlord. Rent is almost like 100% interest.
- If you are moving up or moving down, make sure you are making the move for at least five years, or that you have a good plan in place if it’s shorter term. If you have to move quickly, don’t worry. I’ve got lots of strategies and ideas to give you Plans A through Z to get to your goals.
Want to discuss any of the above? Email me at Liisa@LiisaVexler.com.
*I’m not an economist and these are super-simplified explanations for complex, multi-factorial issues – this is simply how I make sense of things. Speak to your lender, your financial advisor and your accountant for financial advice related to your personal situation before making any decisions.
I'm Liisa and I love helping people moving to Ottawa make their home purchase and transition smooth and seamless. I also love helping sellers get the most for their Ottawa home. Let me know how I can help you make your real estate dreams come true.
613-898-1184 (call or text)