Last year I suggested that if you were to ask ten strangers about the Ottawa condo market you would likely get a pretty constant message that the market wasn't very pretty. Keep in mind it has been a rough number of years since things were booming. However, if you were to ask another ten people this year, I would say the responses are going to be less confusing and more focused.
Since the 2017 Market report, things have certainly increased and we are seeing the condo market pick up. There are fewer listings and fewer DOM (days on market) than in past years. Buildings that had high numbers of listings, only have a couple (if that). The question could be asked if this is due to less supply of units or seller's pricing more realistically and selling. We are constantly seeing multiple offers on condos - again, is it due to lack of supply or more accurate pricing, or both? While the market is not red hot it is certainly better than in previous years.
All of this while the government is placing more rules and regulations to calm the markets in large urban centers (Toronto etc.). While it will still be interesting to see how the most recent mortgage changes will affect the market - it is too early to tell but most anlysts are agreeing it will have little to no impact on the market especially in Ottawa.
CMHC is predicting that housing starts (new construction) in Ottawa will decline over 2018 and 2019 caused by a drop in apartment (condominium) starts (not freehold housing). This will continue to strengthen the demand for resale or existing homes, especially due to Ottawa's relative affordability. This affordability factor will also help to push up the price of Ottawa resale properties.
What to expect for the 2018 Ottawa condo market?
- A positive condo market. Slightly improved over the 2017 market but not as large of a change as was expected. This means much more balanced, or slightly more in favour of the seller.
- Slightly increased sales numbers to last year with a modest increase in price. Building off of 2017 and continuing to see growth.
- More units sold to buyers located outside of Ottawa. Parents purchasing for kids while at school, investors from Toronto, etc. Ottawa has a huge leg up in comparison to other cities when it comes to affordability. We will see more units purchased as investments since the "Ottawa real estate dollar" goes further. Add in the relatively slow and constant growth, it is seen as a safer investment than Toronto or Vancouver.
- Tighter regulations in condo buildings for short-term accommodations (Airbnb) and more freehold units converted to supply the demand. There is a lot of money in short term rentals, and there is no shortage of people looking for it.
- First-time buyers using more family money/credit. Borrowing from the bank of mom and dad will be more popular due to the changes in mortgage requirements. As well as parents being on title - to increase the ability for the child to qualify.
- Little impact from the Mortgage Stress Test. Due to Ottawa's lower average price point, the mortgage stress test will affect fewer buyers than in larger urban centers where the average price is much higher.
- More demand for units closer to downtown. The city of Ottawa has a huge push to calm traffic. This includes removing secondary lanes, increasing "no right turn on reds", increasing the number of bike lanes, advanced pedestrian walk at lights, etc. The goal is to make the streets safer - which is great. However, this is going to see an increase in the time it takes to get to and from work. This will also push commercial development in areas outside of downtown.
- Messy period around marijuana regulations with landlords/tenants and condo boards. As well, what constitutes a grow-op and personal use with regards to disclosure when selling.
Thoughts? It is going to be an interesting year and I am looking forward to it! Bring it on.
Agree/disagree? Tell me below.