Ottawa Citizen – VITO PILIECI
Updated: April 3, 2019
The number of resale homes sold in Ottawa slid in March, as tight inventories put pressure on buyers to bid on limited offerings, pushing the prices of available homes even higher.
March marked the first month in 2019 where the number of resale homes sold was lower than the same month last year. According to the Ottawa Real Estate Board (OREB), agents sold a total of 1,511 homes last month, a drop of 8.6 per cent when compared to the 1,654 properties sold in March 2018.
“Lack of inventory is responsible for March’s deficiency in residential unit sales,” said Dwight Delahunt, president of the OREB. “This tightness of supply is manifesting in significant reductions in days on market, and properties selling very quickly. In some pockets of the city, buyers are facing multiple offer situations, and properties are often selling over list price.
“These dynamics of low inventory, reduced days on market, and multiple offers are signs of a seller’s market in these areas. While a benefit to those sellers, it’s stressful and time-consuming for buyers.”
New residential listings in Ottawa were down 21 per cent in March, compared to the same month in 2018. The number of those new listings in 2019 is down 30 per cent when compared to March 2017.
The tightening market is forcing buyers to compete for whatever is available, pushing the price of real estate even higher. According to the OREB, the average sale price of a residential-class property sold in March in the Ottawa area was $480,143, a rise of 7.2 per cent over March 2018. The average sale price for a condominium-class property was $290,181, an increase of 5.2 per cent from this month last year.
The OREB said the increasing price of real estate in Ottawa isn’t likely to slow down anytime soon, as demand continues to skyrocket for homes in the nation’s capital.
“In Ottawa, we have a population base that’s increasing year over year with a growth rate of 8.8 percent, which is higher than Ontario (5.7%) and Canada as a whole (5.9%). Immigration and high employment levels are bringing residents to our desirable and affordable city,” said Delahunt.
“With high demand and limited supply, prices will continue to be pushed upwards. It’s a simple and fundamental economic principle. Although we appreciate the recent measures the federal government has taken towards affordable home ownership, all three levels of government need to work together at implementing mechanisms that will also restore the supply side of the market.”
This year’s federal budget introduced an incentive program that could lower mortgage payments for households making less than $120,000 per year.
The OREB suggested that more high quality, upscale developments are needed in the nation’s capital, which would spark existing home owners to consider listing their property, creating an opportunity for “move up” or first-time buyers.
The OREB also urged the federal government to rethink the stress test that is applied to new home buyers. The stress test affects buyers looking to finance more than 80 per cent of the home’s price. Those buyers are forced to qualify for their loan using a higher interest rate than what is being offered to them, in order to ensure they can handle additional financial pressure should the economy improve.