Helloooooo Ottawa!! I hope everyone’s enjoying the summer heat and sunshine. Let’s dive in to current real estate trends, stats, and of course, predictions 🙂
As opposed to the typically slow July market that we expect, last month was actually fairly busy. Home sales volume increased by 13.6% compared with July of 2023. But before we get too excited that the market is hot again, let me say that home sales volume is still 8.8% below the 10 year average for the month of July. So yeah, not exactly red hot out there but decent for summer.
Another of my predictions has proven to be a little off. Earlier this year, we were on course with record high numbers of active listings. I thought this would continue through the summer months, but that has not been the case. For various reasons, the number of active listings has slowed down recently. If you recall, I had stated that if things kept up at the rate they were going, we’d be in serious trouble with way too much inventory on the market by October. Well, listings have levelled off and we’re closer to a balanced market than a couple months ago (keep in mind that it is still a buyer’s market).
As usual in a buyers market, many sellers are cancelling their listings and switching them to rentals. And for sellers that don’t need to sell right away, many are simply sitting on the sidelines and waiting until the market heats up again. With the ongoing slow down of new builds, I predict that the market will eventually catch up and we will have a shortage of resale homes. And Ottawa has a fairly rapidly growing population, so yeah, supply and demand….
Now, on to everyone’s favorite topic lately; interest rates. As you already know, the Bank of Canada has done 2 consecutive rate drops recently, with further drops expected in the near future. Something to keep in mind; if/when buyers believe that rates will continue to decrease, they will wait before making a purchase. Buyers are not stupid. If they think something will be cheaper next month, they will wait for the better deal. This also applies to home prices; if a buyer thinks houses will be cheaper in the future, they will wait for the price to drop. (sidenote: I don’t foresee prices declining much, if any, in this city).
“Historically, interest rates always go up during times of war”. I’ve ready this from a few sources. And looking at the global situation, I’m still concerned that major conflicts/war are on the horizon for many countries (which will affect all of us). My guess is rates will drop slightly in the near-term, but the long-term picture they will continue to gradually climb (sorry, I know this is not what anyone wants to hear).
When we look at the historic trends, interest rates have been on an overall decline since around 1980 (you can see the Bank of Canada rate history here). With the bottom being around 2021 / 2022, we may be heading into a long-term rise (not in a straight line, obviously). Of course, these are guesses/predictions, and no one knows with absolute certainty.
For curiosity, let’s look at the current interest rates on a global level. There’s a handful of countries that are certainly struggling with extremely high rates (Argentina, Venezuela, Turkey, Egypt, Iran, and many African countries). Will some of the first world countries head in this direction? Only time will tell…. Check the stats here. For now, Canada is doing very well comparatively.
Now, on to Ottawa real estate sales stats for the month of July.
JULY 2024 SALES STATS:
SALES VOLUME:
In July 2024, residential and condo resales increased by 13.6% compared to July of 2023.
AVERAGE SALE PRICES:
The average price of detached homes sold in July was $734,700. This is an decrease of 0.1% from 2023.
The average price of townhomes (condo & freehold) sold in July was $506,100. This is an increase of 3.4% from 2023.
BIG PICTURE : WHAT’S NEXT?
Since I’ve already given my predictions on what’s next for interest rates, let’s dig into the unpleasant topic of inflation. I believe inflation will continue for the long-term (again, sorry for the negative outlook. just being honest). Yes, this means household disposable incomes will suffer (credit card debt is currently at all time highs). I just don’t see how inflation will go away when:
– govt continues to print new money at record rates
– taxes are increasing everywhere (the govt has to recoup all that money they’re printing)
– supply, manufacturing, and shipping prices are increasing
– labour costs are increasing
– loss in confidence in our current governments/systems
– people are generally uncertain of their financial future, which leads to less spending and increased saving (when people are worried, they tend to save more)
We can all agree, it’s a very interesting time politically. And with that, there is a growing uneasiness. I’ve said it before and I’ll say it again, now is not the time to make any large, high-risk financial decisions (unless you’re very clear on your vision and numbers). #KnowYourNumbers
OTTAWA NEWS:
Let’s take a peak at a couple large developments coming down the pipeline.
Ottawa is under major development, and it’s mostly due to the ‘purpose built rental’ sector. Almost every developer has stopped building condos, and are building rental units instead. Many reasons for this, with funding being a major factor. The banks seem to be happy to finance rental developments, while the criteria to borrow for a condo tower is next to impossible.
Check out this article which takes a look at 15 major developments across Ottawa. Some are attractive and exciting, while many are dull and lack-luster. And it appears that just about every neighborhood will see some big buildings soon, from Orleans to Kanata to Barrhaven.
CHRIS STEEVES
www.exprealty.com
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