Real Estate

Ottawa and Surrounding Area Real Estate market discussion

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Sr. Member
Oct 2, 2017
850 posts
608 upvotes
skeet50 wrote: It isn't a sign of a hot market if it isn't pushing prices upward. Look at Jan's stats. Sales were up 16% from last Jan, but prices were up only an average of 1.5%. That would not define a hot market in my mind.

If you look at the historical numbers, up until 2012 we were enjoying average annual price increases of about 6.2%. It's the recent prolonged slow down that has dragged that number down to 5.74%. Sales numbers now are showing that there is some pent up demand, most likely as a result of the past 5 slow years, that is being met. But, it doesn't look like yet we are even back to normal, let alone exceeding it (with price increases exceeding 6.2% annually).

I just think that whenever I read comments on "hot" real estate market it seems that sometimes people have forgotten what the normal or average real estate market is in Ottawa. Is an average market a strong market? Well, we can argue adjectives back and forth, yet, imo, an average market is an average market. And, in Ottawa, at least, we are not there yet.

BTW: I am a homeowner and would love to see stronger house prices. I am cautiously optimistic. But I will tell you this, I would relish on the market numbers proving me wrong. :-)
Hot is relative term obviously, it's hot compared to right now compared to previous performance of sales in Ottawa (not Toronto or Vancouver). You're also quoting historical data, which accurate lags behind what is happening now. The funny thing is most home owners in Ottawa don't even realize the value of their property, those that are listing are the ones cashing it in it.. who knows how long. Maybe it will fall a bit when supply increases. Speaking as someone looking to buy right now, properties are going from active to conditional in about 2 weeks. "Oh that looks interesting" quickly turns to "it's sold".
I'll see you at the top, cause the bottom is too crowded
Deal Addict
Nov 26, 2004
4460 posts
4122 upvotes
Tadalafil wrote: Weird question, but please bear with me.

What areas/ neighbourhoods in Ottawa are over represented with Asian buyers? Its no secret that Asians (specifically Chinese) have an out-sized influence in driving home prices in Canada. Consequently, neighbourhoods that attract more Chinese buyers should outperform other neighbourhoods.

I tend to see many Asians in Kanata and Barrhaven area. Are there any other pockets of Ottawa where Asians cluster? Do areas like Kanata and Barrhaven have the potential to become the new Markham and Richmond Hill or is that phenomenon exclusive to the GTA?
I think the Chinese buyers here are very different than the ones in Vancouver or Toronto. The ones in Ottawa tends to be highly educated but working. Whereas the ones in Vancouver and Toronto that were driving the housing market brought money here and doesn't need to work. Thus, in Toronto and Vancouver, during weekdays lunch and dinner hours, you will see the Chinese restaurant, especially the higher end ones, overfill with customers, whereas
most of the "authentic" Chinese restaurant in Ottawa struggle to stay in business because business tends to be slow during the weekdays.
Deal Fanatic
Jul 4, 2004
7430 posts
4676 upvotes
Ottawa
Tadalafil wrote: Are you a realtor? Are the sales data for Ottawa available to the general public?
I'm not a realtor but my wife is and so she has access to sales data.

As far as I know, sales data is not available to the public but I've never looked for it.
Member
Jul 25, 2008
400 posts
274 upvotes
ottawa
one more thing for people expecting Ottawa to have the types of gains other cities have - remember we're on the border between two provinces. Individuals can choose which situation is more advantageous to them (lower income and working class employees are probably better off financially in Gatineau, middle class and upper income in Ontario. This depresses rents and home values as those on the bottom are not as desperate to find affordable housing.
Sr. Member
Aug 6, 2011
599 posts
267 upvotes
danishh wrote: one more thing for people expecting Ottawa to have the types of gains other cities have - remember we're on the border between two provinces. Individuals can choose which situation is more advantageous to them (lower income and working class employees are probably better off financially in Gatineau, middle class and upper income in Ontario. This depresses rents and home values as those on the bottom are not as desperate to find affordable housing.
Ottawa houses price will increase, but there's a limit to what some people can accept/handle. The price gap between Gatineau and Ottawa can't grow indefinitely and there'll be a natural catch up in price in Gatineau, since some buyers will give up and buy in Gatineau because of the value. Obviously, Gatineau price will never on par with Ottawa, there'll be always a gap. I'd also add that I know some people coming from Montreal choose Gatineau over Ottawa just because of the value. For them language is not a problem, and they've always lived in Quebec, so they don't see the problem of living in Quebec.
Deal Expert
Oct 30, 2006
16321 posts
7966 upvotes
William W wrote: I think the Chinese buyers here are very different than the ones in Vancouver or Toronto. The ones in Ottawa tends to be highly educated but working. Whereas the ones in Vancouver and Toronto that were driving the housing market brought money here and doesn't need to work. Thus, in Toronto and Vancouver, during weekdays lunch and dinner hours, you will see the Chinese restaurant, especially the higher end ones, overfill with customers, whereas
most of the "authentic" Chinese restaurant in Ottawa struggle to stay in business because business tends to be slow during the weekdays.
I agree that these are different Chinese buyers. The ones coming to Ottawa now instead of Toronto and Vancouver are likely coming for the stable government jobs and more affordable housing (because they're definitely not coming for the weather). In terms of neighbourhoods and schools, those with families likely prefer Kanata and Barrhaven, as they are newer, quiet, and safer. The communities haven't been built up to the level seen in other Canadian cities, but I think we're starting to see its beginnings with the T&T, supermarkets expanding their ethnic selection, and bubble tea shops.

But I think this isn't much different from those that first came to Vancouver and Toronto 30 years ago. They settled in Chinatown with other Chinese, then the suburbs with their cheaper housing. They invested in the cheap land and drove up the prices.

It will be interesting to see if the same happens in Ottawa. New taxes and restrictions on money leaving China have led to a drop in prices in Toronto and Vancouver. Investors may be taking a wait and see approach there, instead of moving on to the next major cities with cheap housing.

Montreal seems to be going up, but who knows how much of this article is PR: https://montrealgazette.com/business/lo ... -vancouver
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Sr. Member
Aug 6, 2011
599 posts
267 upvotes
azmongold wrote: Hot is relative term obviously, it's hot compared to right now compared to previous performance of sales in Ottawa (not Toronto or Vancouver). You're also quoting historical data, which accurate lags behind what is happening now. The funny thing is most home owners in Ottawa don't even realize the value of their property, those that are listing are the ones cashing it in it.. who knows how long. Maybe it will fall a bit when supply increases. Speaking as someone looking to buy right now, properties are going from active to conditional in about 2 weeks. "Oh that looks interesting" quickly turns to "it's sold".
I've been monitoring Alta Vista and the vicinity for a while now. The supply is very low, especially under 550K. most of them are sold within 2 weeks, in bidding wars, if priced right.
The other area I'm watching is the West neighborhoods in the greenbelt, I feel like is not as hot.
Deal Expert
Oct 30, 2006
16321 posts
7966 upvotes
A townhouse in our area just sold. They had an open house last week (before the massive snowstorm) and they were asking about $10-15k more than similar homes on that block a few months ago.
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Deal Addict
Nov 26, 2004
4460 posts
4122 upvotes
cyberfreak123 wrote: I've been monitoring Alta Vista and the vicinity for a while now. The supply is very low, especially under 550K. most of them are sold within 2 weeks, in bidding wars, if priced right.
The other area I'm watching is the West neighborhoods in the greenbelt, I feel like is not as hot.
Even homes that are built in the late 1950s to early 60s in the $700k to $800k segment are moving between Smyth and Pleasant Park or the Faircrest Heights subsection of the Alta Vista area. Though, I think the hurdle in that area is $1m for these old timers as none of them seems to have moved. I guess there is a limit to how much medical professionals who works in the hospitals will spend. OTOH, I am not sure if this is a one off or start of a new trend, but I know of someone who works at Shopify bought one of these older homes and tore it down to build a 3600 sq ft home on it. I suppose it makes sense due to its proximity to downtown as not everyone like to live in the postage stamp size lot in the Glebe or Old Ottawa South.
Newbie
Dec 12, 2013
52 posts
58 upvotes
Ottawa Luxury Market

From the article:

Ottawa's luxury home market forecast to continue to appreciate after a year of healthy price gains and sales

Ottawa's luxury home market posted a second year of healthy price appreciation during the twelve months ending January 31, 2019. The median price of a luxury house in Ottawa increased 5.0 per cent year-over-year to $1,811,716 compared to the same period the previous year. Meanwhile, the median price of a luxury condominium increased 3.8 per cent year-over-year to $1,005,549 during the same period.

"While the typical luxury buyer in Ottawa is usually a local buyer who will live in the property, there is a strong sentiment among buyers that Ottawa's luxury home market is a sound financial investment," said Charles Sezlik, sales representative, Royal LePage Team Realty. "The local economy is doing well, spurred by our booming technology sector, which is creating both wealth and jobs in the region. In addition to a growing buyer demographic, Ottawa's luxury home market is benefitting from healthy consumer confidence."

Sezlik added that compared to luxury home prices in other Canadian major real estate markets, Ottawa still has considerable room to grow.

"The lower end of the luxury market is very competitive. A good listing in a good location will not stay on the market long," said Sezlik. "Luxury properties priced over 2 million had a slower start at the beginning of 2018 but demand quickened in the second half of the year. We are seeing this demand continue through the start of 2019 and expect another year of healthy sales and price appreciation."

During the twelve months ending January 31, 2019, Ottawa's luxury house sales were flat year-over-year, however, luxury house sales more than doubled compared to two years prior, rising from 26 sales to 60 sales.

When looking ahead, the median price of a luxury house in Ottawa is forecast to increase 4.2 per cent year-over-year to $1,887,624, while the median price of a luxury condominium is forecast to increase 3.1 per cent to $1,036,747 in the next twelve months.
Deal Fanatic
Jan 15, 2017
5749 posts
6121 upvotes
Ottawa
StefanW499 wrote: ...
Ottawa's luxury home market posted a second year of healthy price appreciation during the twelve months ending January 31, 2019. The median price of a luxury house in Ottawa increased 5.0 per cent year-over-year to $1,811,716 compared to the same period the previous year. Meanwhile, the median price of a luxury condominium increased 3.8 per cent year-over-year to $1,005,549 during the same period.

During the twelve months ending January 31, 2019, Ottawa's luxury house sales were flat year-over-year, however, luxury house sales more than doubled compared to two years prior, rising from 26 sales to 60 sales.

When looking ahead, the median price of a luxury house in Ottawa is forecast to increase 4.2 per cent year-over-year to $1,887,624, while the median price of a luxury condominium is forecast to increase 3.1 per cent to $1,036,747 in the next twelve months.
So the Ottawa luxury market is on par with the non-luxury market. Sales are flat year over year and price increases are actually expected to be lower in 2019 than in 2018. And yet somehow this made the evening news circuit recently?
Member
May 17, 2010
397 posts
264 upvotes
skeet50 wrote: The historical yearly price increase in Ottawa is currently about 5.74%.
5.74% over what period?
The national average for the past 25 years was 4.7% (as of December 31, 2017), it's now probably slightly lower.
Deal Fanatic
Jan 15, 2017
5749 posts
6121 upvotes
Ottawa
bunget wrote: 5.74% over what period?
The national average for the past 25 years was 4.7% (as of December 31, 2017), it's now probably slightly lower.
Great question. The 5.74% is since 1956. Your question got me thinking and after some calculations, the previous 25 year average is down to 4.22% annually and the previous 15 year average is 4.27%. So it would seem that average annual prices in Ottawa are trending lower over time and lower than the national average that you noted above.
Sr. Member
Aug 14, 2007
562 posts
314 upvotes
Ottawa
When you calculate the growth rate, you should also consider the annual inflation as well. I am pretty sure previous 25 year average inflation is much higher than past 15 years average.
Deal Fanatic
Jan 15, 2017
5749 posts
6121 upvotes
Ottawa
audiorichard wrote: When you calculate the growth rate, you should also consider the annual inflation as well. I am pretty sure previous 25 year average inflation is much higher than past 15 years average.
I managed to find average inflation for ON for the past 15 years. Considering inflation, it brings the annual increase in Ottawa to about 2.47% in the past 15 years. This is average, of course, with some homes out performing and others under performing. Does that number seem reasonable to you?
Deal Addict
Nov 13, 2013
4520 posts
3685 upvotes
Ottawa
These historical trends don't mean too much. The trend interest rate was falling during that whole period so the same income bought more and more house. That trend is now over. On the other hand Ottawa Real Estate is undervalued based on income compared to other Canadian cities. Some claim this is because of an abundance of land. I don't know if this is true compared to other cities our size. I think it is the cautious nature of a city of bureaucrats.

Last point is anyone following the huge increase in costs for the LRT stage 2? If the city borrows $700 million extra that translates into something like a 5-10% property tax increase. Meanwhile in Quebec taxes are steady or falling. Gatineau has lagged the past few years after a previous strong period I wonder if the pendulum might swing. I know some people would never move to Quebec but for others the taxes are the main disincentive.

Personally, I expect a very good 2019 and dependent on the election 2020 as well. Maybe after that will be time to get out of the market or at least hold on primary residence.
Sr. Member
Aug 14, 2007
562 posts
314 upvotes
Ottawa
skeet50 wrote: I managed to find average inflation for ON for the past 15 years. Considering inflation, it brings the annual increase in Ottawa to about 2.47% in the past 15 years. This is average, of course, with some homes out performing and others under performing. Does that number seem reasonable to you?
I do a basic analysis to calculate the net growth rate of Ottawa market (Gross Growth Rate - Inflation), here are the numbers: 5 Year Avg= +1.06%, 10 Year Avg= +1.75%, 15 Year Avg = +2.42%, 20 Year Avg = +3.31% and 25 Year Avg = +2.40%. Overall, the data tells us that real estate market is a good tool to against the inflation (it better be!), the past 5 year and 10 year avg are doing very poorly mainly due to the performance in between Year 2012 to 2016. The net growth in between Year 2012 to 2016 is -0.02% (Yes, it is negative), which means you are actually losing your power of purchase in that 5 Year period if you own a property in Ottawa. On the other hand, if you purchase a property in GTA in between Year 2012 to 2016, the net growth is +50%+.
Anyway, I think Ottawa real estate will do some catch up in price this year. Starting from last Nov, almost all of listings I am interested in are sold over asking from 5% to 20%.
Deal Fanatic
Jan 15, 2017
5749 posts
6121 upvotes
Ottawa
audiorichard wrote: I do a basic analysis to calculate the net growth rate of Ottawa market (Gross Growth Rate - Inflation), here are the numbers: 5 Year Avg= +1.06%, 10 Year Avg= +1.75%, 15 Year Avg = +2.42%, 20 Year Avg = +3.31% and 25 Year Avg = +2.40%. Overall, the data tells us that real estate market is a good tool to against the inflation (it better be!), the past 5 year and 10 year avg are doing very poorly mainly due to the performance in between Year 2012 to 2016. The net growth in between Year 2012 to 2016 is -0.02% (Yes, it is negative), which means you are actually losing your power of purchase in that 5 Year period if you own a property in Ottawa. On the other hand, if you purchase a property in GTA in between Year 2012 to 2016, the net growth is +50%+.
Anyway, I think Ottawa real estate will do some catch up in price this year. Starting from last Nov, almost all of listings I am interested in are sold over asking from 5% to 20%.
The numbers are very interesting. At first I agreed with your statement that the real estate market is a good tool against inflation, but now I am not so sure. When you factor in property taxes, which all home owners have to pay, and currently running at over 1.068% per year (not including water and sewer) and continuing to increase in the foreseeable coming years, those numbers don't look that attractive at all.

I am also hoping for some price gains catch up in the coming year. These numbers certainly provide some food for thought.
Deal Fanatic
Jul 4, 2004
7430 posts
4676 upvotes
Ottawa
One thing to keep in mind is that the RE value increases are also "externally inflated". I live in an older neighborhood and the houses that are selling for a lot are the ones that have been renovated but for a house that sold for $400k in 2010 and is now worth $800k does not mean that it's actually increased 100% over 8 years if the owners also spent $100k in renovations. Similarly, near my area, older homes are selling for $400-600k, torn down and replaced with huge homes selling for $1+ million. Theses houses did not appreaciate 100-500%. While it does happen that homes are sold that are actually worth less than before (fire / flooding / bank repo / etc that are not fixed up), typically, most houses that are at least a few years old (maybe 5-10) that are sold have at least some renovations but those costs are not factored into the annual increases.
And as I mentioned earlier in the thread, IMO, homes are getting bigger. 25 years ago, the average single family house probably only had a single car garage and 2 or 3 bathrooms and only bigger homes had ensuite bathrooms but it was more the exception, most homes had wall-to-wall carpet and linoleum flooring, laminate counters, A/C wasn't that common, etc. Modern homes often have 2 or even 3 car garages and it's rare to find a newer home without an ensuite and many have multiple ensuites and many have basement bathrooms, hardwood and ceramic tile flooring, marble or granite counters, A/C, etc. The avg modern home has more amenities that an older home in the past so it's more expensive - not because it's increased in value but because there's a lot more expensive features.
Sr. Member
Aug 14, 2007
562 posts
314 upvotes
Ottawa
In my point of view, real estate investment is all about leverage. If you pay $100k down payment for a $500k property, if it rises 5%, it becomes $525k and your annual return is 25% (25k/100k). Of course, it is not a net profit, buying/holding/maintenance/selling of property is lot of works and costly, but you can easily get funding from bank for your investment with low interest. It is impossible to get the same type of leverage for other type of investment, such as stock or bond.

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