Ottawa housing market continues to roll despite higher interest rates

Relatively modest gains last month came on top of some truly spectacular jumps the previous year. For example, average home prices in March 2021 were up 36% from a year earlier.

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It will take a lot to slow the pandemic-fueled momentum in Ottawa’s residential resale market. In March, the average price of a home exceeded $853,000. The condominiums brought in $479,000. Both were record averages for the area, according to data released Tuesday by the Ottawa Real Estate Board. Home sales in the surrounding valley accounted for about a quarter of the total.

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For those looking for a sign that this real estate bubble might stop inflating one day, there was a thin reed of hope in the relatively modest year-over-year gains: the average rise in home prices in Ottawa and in the Valley was 12.5 percent, while condos appreciated just under 10 percent. These are the smallest increases since the start of the pandemic in early 2020.

However, a closer look at the data reveals strong price momentum still in play despite the prospect of higher mortgage rates. Relatively modest gains last month came on top of some truly spectacular jumps the previous year. For example, average home prices in March 2021 were up 36% from a year earlier. Over the two years of the pandemic, residential properties have seen average price increases of more than 50%, representing a capital gain of nearly $294,000 for the typical homeowner.

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Condo owners over the same period saw the value of their properties jump 30%, or about $110,000.

A “For Sale” sign in front of a home in Kanata on Tuesday.
A “For Sale” sign in front of a home in Kanata on Tuesday. Photo by ERROL MCGIHON /Postmedia

The forces behind these trends are well known: historically low interest rates, reduced inventory and an increase in the number of investors and people selling even more expensive properties in Toronto and elsewhere to grab what seem relative bargains in the National Capital Region.

For first-time buyers, this is distressing. A look at March sales data for residential properties shows surprisingly few districts where the average price is below $700,000. Of approximately 50 districts, four were in the surrounding valley and only one – Carlington/Central Park – was in the city proper. This last neighborhood could even be an anomaly since residential sales there in February reached an average of more than $720,000.

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Indeed, it’s no wonder out-of-town home buying has been so popular, aside from the work-from-home phenomenon. The average residential price for the Valley Districts in March was $670,000, up nearly 16% from the same month last year. When the Valley data is removed from the totals, home prices in Ottawa last month averaged $913,200, a gain of 11%.

Last month, 16 of the city’s 43 real estate districts recorded average home prices above $1 million, excluding districts with minimal sales. This includes the six districts that also saw the fastest year-over-year price increases: Manor Park/Cardinal Glen, Carlington/Westboro, Country Place/Pineglen, Ottawa West/Tunneys Pasture, Mooney’s Bay/Carleton Square and Britannia/Lincoln Heights.

Council reported a slight increase in the number of properties available for sale in Ottawa and the Valley. There were 953 residential listings at the end of March, along with 282 condos for a total of 1,235. This is an increase of almost 5% over the previous year. Unfortunately, dwindling inventory remains a long-standing issue and has been the trigger for multiple bidding wars in recent years for most properties. Just four years ago, potential buyers could choose from nearly 4,700 listings. This was back when the resale market in town was considered normal.

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