If you ask ten strangers about the Ottawa condo market right now, you are likely to get a pretty general idea of how things are currently going. Not great, slow, crap, etc. Unlike it's sister market - freehold homes are selling quite well and are still breaking monthly sales numbers. Condo's on the other hand, are not so hot. Let's take a quick look back and then see where things are possibly headed.
The condo market has been in this "slump" since 2012 when supply/demand started catching up. We started noticing the number of listings and DOM (days on market) increasing, and fewer multiple offers etc. Over the last few years, the conversation when sitting down with someone looking to sell is often about how to loose as little as possible, or even how to break even. Now keep in mind there are a few factors in play here. Most of these people bought in 2009-2013 (or earlier) and expected the market to keep going the path that it was. At that time, who cared if the view was horrible, upgrades were slim, or they over paid.... it would still be worth more when they sold. As well, many times the condo that was purchased does not fit their current lifestyle (partner/pet/baby/clothes addiction), and after only a few years they are looking to sell. That person has not stayed in the unit long enough to really see the value rise.
Where are we right now? Well in 2016, the number of unsold units dropped by almost a fourth from November to February (529 vs 699). Builder condo starts (number of permits etc.) from the first 11 months of 2016 were 583. Down from 776 for the same period in 2015, and down significantly from 1301 in the same 11 month stretch in 2014. Less builder starts mean less supply and allows everything to even out (typically 2-3 years). Right now, we still have buildings on the way but more builders are focusing on the hot rental market. Switching poor selling or upcoming projects to rental buildings. Housing affordability really hasn't changed - its still an issue overall, however new first-time buyer credits and low-interest rates still make purchasing attractive (if you can afford it).
Is the market right now really that bad? The fall market saw numerous multiple offers... (yes, you read that correct), and short days on market (3-4 days, 7 days etc). We had this first hand and couldn't believe it. One of my Centretown listings in the fall had multiple offers (five in fact!) and the property sold over list price. So, no... the condo market in Ottawa is certainly not horrible. It just depends on numbers and who you're talking to.
What should we expect for 2017? Based on the numbers and market, I expect a better condo market overall for 2017. Not a crazy difference, but it will feel better or more positive than 2014/2015/2016, leading the way for a larger change in 2018.
- A positive condo market.
- Similar sales numbers, but with a modest 1-3% increase in price.
- Sellers spending more to prepare the unit before selling. Painting, decluttering, even staging. All in an effort to maximize the value and shorten the time it takes to sell.
- Fewer high rise condos selling for investment. The 2015/2016 built condo's are all seeing the condo fee rise and the numbers are harder and harder to make work. However you will still see it, being more hands-off and easier to handle makes them perfect for out of city owners, or new first time investors.
- No units purchased for airbnb. This will move to centrally located freehold housing with less rules and restrictions. If a building didn't restrict short term rentals in 2016, it will in 2017.
- Buyers will spend more time to decide before making a purchase. There is more information and reviews online about buildings and the builder. Buyers will (or should - see below) look closer at the building and unit before they place an offer.
- First-time buyers looking at slightly larger units. Even if that means waiting to afford them. They will learn from the mistakes of those selling now.
Keep in mind there is a lot going on with respect to United States, which could impact all of this. These are my perdictions. Thoughts?