Real Estate

Ottawa Real Estate market discussion

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  • Dec 15th, 2017 11:20 am
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[OP]
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Nov 26, 2004
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I am curious if the Ottawa Citizen will post an article with breakdown by different parts of the city this month. By eyeballing the listings that are currently available on the market and the prices listed on builders sites such as Minto and Mattamy, I will say Kanata and Barrhaven is doing much better than the rest of Ottawa. But prices looks to be stagnate in Orleans and more expensive neighborhood like Rockcliff.

Though, I wonder whether the sales mix also affected the numbers. I would assume a lot of first time buyers are the low ratio borrowers that are subject to new stress tests, and that's the segment of the market that is driving the bulk of the sales.
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Dec 4, 2016
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Increasing sales is usually a bullish sign. The stagnant average price is probably a matter of sales mix. Keep in mind that Ottawa market has been in a slump for the past 5 years, after the federal government layoffs. During that time, a lot of owners rented their old house out after moving up, as they couldn't sell for a price they wanted. Now these lower end units are finally being sold. Hopefully the increased sales and gradually dropping inventory eventually translates into higher prices.
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michelb wrote:
Dec 6th, 2017 8:18 am
IMO, it's signs of a very stagnant market.

They don't say it in the article but by my calculation, that means an annual increase of 0.64% year to year overall (much less than inflation) and for real estate, that's really not good as typically people are always building bigger, doing upgrades, etc (some people do nothing with their houses but the average person will do enough to at least make sure it doesn't get worse and a lot of people do renovations and upgrades also new homes are always getting bigger and with nicer finishes so values should always be going up).
That's not true at all. Houses are getting smaller. I'm not talking about down-sizers either. People of the current 35-55 generation are starting to realize that heating and paying utilities for a 3500sq/ft house for a family of 4 is not the most environmentally friendly way of living. They choose a smaller house with more luxurious finishes. That trend has been on-going for a while.

People upgrade and renovate houses they live in not sell. They might put lipstick (paint and countertops) to list a house but nobody buys a new kitchen, finishes a basement or interlocks their yard to sell a house so that statement is also false. So these are not in the sales data.
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Cas77 wrote:
Dec 6th, 2017 9:12 am
That's not true at all. Houses are getting smaller. I'm not talking about down-sizers either. People of the current 35-55 generation are starting to realize that heating and paying utilities for a 3500sq/ft house for a family of 4 is not the most environmentally friendly way of living. They choose a smaller house with more luxurious finishes. That trend has been on-going for a while.

People upgrade and renovate houses they live in not sell. They might put lipstick (paint and countertops) to list a house but nobody buys a new kitchen, finishes a basement or interlocks their yard to sell a house so that statement is also false. So these are not in the sales data.
I respectfully disagree. I think if you look at new home builders you will find that they list 3000-4000+ sq ft homes, ten years ago they might have listed 2500-3500 sq ft homes. Detached homes pretty much all have 2 car garages and you can even get 3 car garages, not long ago, most were single car garages and you only saw 3 in custom homes. New buyers are getting fancy hardwoods, granite, etc. Used to be that just plain hardwood was an upgrade and many buyers just got w/w carpet and linoleum. I'm not saying that there are no smaller houses sold but even those will be significantly upgraded compared to a "smaller house" from the past. It's not uncommon to find new homes with multiple ensuites - before even one ensuite was rare.

And I'm not saying that people are upgrading their homes just to sell them (although that does happen quite a bit too - upgraded homes tend to sell much faster than homes that are original. Many buyers do not want to buy and then have to upgrade. They want to get something they can just move in and have it as they want it. Just think of the number of homes that are bought just to flip or as tear-down / rebuilds. This used to be very rare but now it's quite common). I was referring to owners who did the renos and upgrades for themselves but end up selling for whatever reason. There's a huge industry of companies that just do renos to homes - this didn't exist before because there wasn't enough demand for it. Basements used to be something that owners just finished themselves to have a bit of extra space and it really didn't matter what it looked like. Now there's an expectation of the same level of craftsmanship and quality in basements as you'll see in the rest of the house.
Last edited by michelb on Dec 6th, 2017 9:47 am, edited 1 time in total.
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michelb wrote:
Dec 6th, 2017 9:47 am
I respectfully disagree. I think if you look at new home builders you will find that they list 3000-4000+ sq ft homes, then years ago they might have listed 2500-3500 sq ft homes. Detached homes pretty much all have 2 car garages and you can even get 3 car garages, not long ago, most were single car garages and you only saw 3 in custom homes. New buyers are getting fancy hardwoods, granite, etc. Used to be that just plain hardwood was an upgrade and many buyers just got w/w carpet and linoleum. I'm not saying that there are no smaller houses sold but even those will be significantly upgraded compared to a "smaller house" from the past. It's not uncommon to find new homes with multiple ensuites - before even one ensuite was rare.

And I'm not saying that people are upgrading their homes just to sell them (although that does happen quite a bit too - upgraded homes tend to sell much faster than homes that are original. Many buyers do not want to buy and then have to upgrade. They want to get something they can just move in and have it as they want it. Just think of the number of homes that are bought just to flip or as tear-down / rebuilds. This used to be very rare but now it's quite common). I was referring to owners who did the renos and upgrades for themselves but end up selling for whatever reason. There's a huge industry of companies that just do renos to homes - this didn't exist before because there wasn't enough demand for it. Basements used to be something that owners just finished themselves to have a bit of extra space and it really didn't matter what it looked like. Now there's an expectation of the same level of craftsmanship and quality in basements as you'll see in the rest of the house.
Well It looks like i’m not knowledgable enough of this industry and the Ottawa market to comment on, but I will still disagree with most of your points.
Censorship is telling a man he can't have a steak just because a baby can't chew it.
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Cas77 wrote:
Dec 6th, 2017 10:06 am
Well It looks like i’m not knowledgable enough of this industry and the Ottawa market to comment on, but I will still disagree with most of your points.
Just to support my arguments a bit, drive through in-demand older areas near the core (e.g. Glebe, Westboro, Alta-Vista, Rothwell, Skyline, Brittania, etc) and look at the construction. People are buying old 1500 sq ft homes at land value (which is often a lot more than the improved value with the existing house), tearing down the houses and building 3500+ sq ft homes (or often multiple houses). Look in the very high end areas and you'll see some new houses for selling $1-$5 mil. It's not that the existing houses gained that much value, it's that older homes (some of them already big) where torn down (or renovated) into huge 5-10k+ sq ft homes. 10-20 years ago, those were very rare, now they are are quite common. People are also spending $200-300k on interior renos on existing homes (not changing the size). They likely won't get it all back but on resale but if before the reno, the house was worth $550k, now it might sell for $700k. The property value hasn't really increased but the owner improved the property itself to show a 25% increase. Not long ago, spending that kind of money on renos was almost unheard of but now it's quite common and this is artificially driving up property values (the increase is mostly because of the amount spent on the reno (which in most cases is actually at a loss), not on the existing property gaining value).
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michelb wrote:
Dec 6th, 2017 11:26 am
Just to support my arguments a bit, drive through in-demand older areas near the core (e.g. Glebe, Westboro, Alta-Vista, Rothwell, Skyline, Brittania, etc) and look at the construction. People are buying old 1500 sq ft homes at land value (which is often a lot more than the improved value with the existing house), tearing down the houses and building 3500+ sq ft homes (or often multiple houses). Look in the very high end areas and you'll see some new houses for selling $1-$5 mil. It's not that the existing houses gained that much value, it's that older homes (some of them already big) where torn down (or renovated) into huge 5-10k+ sq ft homes. 10-20 years ago, those were very rare, now they are are quite common. People are also spending $200-300k on interior renos on existing homes (not changing the size). They likely won't get it all back but on resale but if before the reno, the house was worth $550k, now it might sell for $700k. The property value hasn't really increased but the owner improved the property itself to show a 25% increase. Not long ago, spending that kind of money on renos was almost unheard of but now it's quite common and this is artificially driving up property values (the increase is mostly because of the amount spent on the reno (which in most cases is actually at a loss), not on the existing property gaining value).
you can't draw any of these conclusions by pointing out the 2 or 3% of people doing $1.2M+ infills or tear downs. There's no land left in the greenbelt so a new build inside the greenbelt is not in the cards for very many people. You do know how big a 3500sq/ft home is right? On an average 25x100 Glebe lot with a 10/ 25 setback? Plus please give me 5 addresses with 3500sqft SFH this year in the areas you mentioned.

Anyways you are clearly in over your head with these arguments you bring up.
Censorship is telling a man he can't have a steak just because a baby can't chew it.
- Mark Twain
[OP]
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Nov 26, 2004
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Cas77 wrote:
Dec 6th, 2017 11:51 am
you can't draw any of these conclusions by pointing out the 2 or 3% of people doing $1.2M+ infills or tear downs. There's no land left in the greenbelt so a new build inside the greenbelt is not in the cards for very many people. You do know how big a 3500sq/ft home is right? On an average 25x100 Glebe lot with a 10/ 25 setback? Plus please give me 5 addresses with 3500sqft SFH this year in the areas you mentioned.

Anyways you are clearly in over your head with these arguments you bring up.
I do see both side of the argument, as I always thought I'm in the minority because I have no interest in buying a 3000 sq ft home. Simply, I'm not interested in paying the extra property tax as well as the heating and cooling bill that comes with a 3000+ sq ft home.

OTOH, I think with the proliferation of HGTV, I'm seeing a lot of new build and renovation happening in my area. I think on Billings Ave alone in the Alta Vista area, there are 4 of these 3000+ square feet infill happening this past year and there are 2 more going up on Crestview Ave a couple of blocks away.

Though, if we were to look at it from a volume perspective, these luxury infills are dwarf by the the thousands of new homes being built by tract builder in Ottawa every year. Simply, I don't think there is enough of a market demand for homes that is in the 3500 sq ft range. After all, unlike Toronto or Vancouver, I believe the Ottawa market slows down significantly once homes are priced over $600k.
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My point was that it doesn't take many of these infill constructions to affect the average and any renovations really skew the numbers.

The CREA numbers posted above state that there were about 950 residential sales in November and that the year over year increase was 3.2%. Assuming that 5 of those sales were these types of infill conversions (which, IMO, is not unrealistic - that could be 1 in Westboro, 1 in Glebe, 1 in Brittania, 1 in Rothwell and 1 in Altavista. It could certainly be a lot higher than 5), those 5 sales that might have "increased" their property value by 25% (because of the reno) represent 0.5% of the sales for the month but push the average significantly. If you assume that they got an extra $200k because of the reno, just those 5 sales push the increase from about 3.0% to 3.2%. Now factor in all the other homes in the city that increased because of smaller renos (doing kitchen, basement or bathroom), I think the true increase in property values for unimproved properties is probably under 2% (i.e. cost of living) which was my original point that based on the numbers, the Ottawa market was pretty stagnant.
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Jan 15, 2017
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Anyone know of an Ottawa brokerage that is now providing sold information to the public?
[OP]
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michelb wrote:
Dec 6th, 2017 1:53 pm
My point was that it doesn't take many of these infill constructions to affect the average and any renovations really skew the numbers.

The CREA numbers posted above state that there were about 950 residential sales in November and that the year over year increase was 3.2%. Assuming that 5 of those sales were these types of infill conversions (which, IMO, is not unrealistic - that could be 1 in Westboro, 1 in Glebe, 1 in Brittania, 1 in Rothwell and 1 in Altavista. It could certainly be a lot higher than 5), those 5 sales that might have "increased" their property value by 25% (because of the reno) represent 0.5% of the sales for the month but push the average significantly. If you assume that they got an extra $200k because of the reno, just those 5 sales push the increase from about 3.0% to 3.2%. Now factor in all the other homes in the city that increased because of smaller renos (doing kitchen, basement or bathroom), I think the true increase in property values for unimproved properties is probably under 2% (i.e. cost of living) which was my original point that based on the numbers, the Ottawa market was pretty stagnant.
http://ottawacitizen.com/news/local-new ... rice-hikes

The numbers are out, looks like single family homes in the west end of Ottawa is doing very well. Looks like it is the condos in the west end and the south end that is dragging down the numbers. Therefore, I will not call the Ottawa market stagnant as we all know real estate is local.

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Awesome,

Im in the Orleans area, 4.9% gain since i moved here is nice to see
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Feb 6, 2017
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I own a single house in Barrhaven, it's been booming and hope it continues to grow. It's not as convenient to go to Carling Campus for DND folks but ain't too bad either if you just hop on the 416, about a 20-25 minute commute.
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One odd thing is that the numbers are not consistent with the Ottawa Real Estate Board's press release from a couple of days from 2 days ago (unless I'm reading it wrong).

The Citizen article says :
... Prices for single family homes jumped 7.3 per cent year over year in November to reach $403,500, the Ottawa Real Estate Board reported this week. ...
The Dec 5th press release says :
...The average sale price of a residential-class property sold in November in the Ottawa area was $418,354, an increase of 3.2 per cent over November 2016...
The difference might be "single-family homes" vs "residential-class" although I would take that to mean OREB's numbers include semis and freeholds but the OREB's avg is higher which would indicate that the price of these semi's and freeholds is higher than the avg and high enough to push the avg $15k which seems very unlikely.

As far as the article, it's a shame they don't just publish a list of all the districts instead of a silly graph with the top 10 and bottom 10 ... (does having a bigger house for 12.3% really help you understand that this is a bigger gain than the smaller house for the 2.3% ?!? I think if you can open the newspaper or website, you probably know that 12 is bigger than 2 ...)

I just noticed that the article does mention the 3.2% / $418k for residential properties but don't elaborate on what exactly the distinction is ...
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Feb 25, 2014
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michelb wrote:
Dec 7th, 2017 9:41 am

I just noticed that the article does mention the 3.2% / $418k for residential properties but don't elaborate on what exactly the distinction is ...
Yes it does.
Benchmark prices are based on an index that reflects multiple housing characteristics such as roof type, number of bathrooms and age of the property, and offers a more consistent view of underlying trends than a simple average.
The 7.3 is based on benchmark prices. While the 3.2 is an overall average of all residential properties

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