Real Estate

Ottawa Real Estate market discussion

  • Last Updated:
  • Jan 23rd, 2020 10:12 am
Tags:
None
Member
Aug 14, 2007
450 posts
200 upvotes
Ottawa
michelb wrote:
Feb 5th, 2019 11:13 am
This doesn't seem right (I don't think the avg a year ago was around $380k and it doesn't match the link cyberfreak123 just posted (1.5% increase in avg price over Jan 2018))
The 15% increase is the 3-year increases. Of course, Ottawa is perform very well in from January 2016 to December 2018 compare with other big cities, it is because Ottawa rises only 5%-6% in total from Year 2012 to Year 2015 while other big cities up almost 50%. Anyhow, I agree with William, Ottawa is a public servant city, and Ottawa market is so predictable. The trend is easy to predict, but the magnitude of the change can be vary, it depends on many other factors.
Deal Fanatic
Jul 4, 2004
5008 posts
1082 upvotes
Ottawa
cyberfreak123 wrote:
Feb 5th, 2019 11:22 am
Can anyone tells me if the oreb or the crea stats include new built houses sales? or they just show resale
That's a good question. I suspect the OREB stats are only for MLS resales as new builds (and FSBO) don't go through their system so they don't have easy access to the data. CREA may include new sales but even that would surprise me as well.
Deal Fanatic
Jul 4, 2004
5008 posts
1082 upvotes
Ottawa
audiorichard wrote:
Feb 5th, 2019 11:30 am
The 15% increase is the 3-year increases. Of course, Ottawa is perform very well in from January 2016 to December 2018 compare with other big cities, it is because Ottawa rises only 5%-6% in total from Year 2012 to Year 2015 while other big cities up almost 50%. Anyhow, I agree with William, Ottawa is a public servant city, and Ottawa market is so predictable. The trend is easy to predict, but the magnitude of the change can be vary, it depends on many other factors.
Thanks for the clarification, I didn't notice that was for 2 years (which makes it sounds much less impressive !!!)

Don't get me wrong a 7.5% annual increase is very good but in many cases, it's not a true 7.5% annual increase (e.g. a house is sold in 2016 for $400k, new owners moves in and spends $30k on renos over the next few years and then in 2018 sells for $460k. The house increased by $60k but there was another $30k put in that doesn't show up anywhere so the real increase is only $30k or 7.5% over 2 years ... That's certainly not the case for all sales but it's quite frequent and it's something that doesn't show up anywhere).

--- Update, corrected my response as the article says it's over 2 years ---
Member
Jun 7, 2010
208 posts
20 upvotes
Hello All:

Looking for some advise for all the seasoned real estate investors on this thread.

I have been searching for a multi level property in golden triangle area for rental income and found this property: https://www.realtor.ca/real-estate/2019 ... n-triangle.

What are you thoughts on this? Heating is baseboard so that is an obvious issue (?). And, the property has heritage designation since is 100+ years old.

Over the past 5 years, I have looked at investing in RE but my calculators have always favored the equities markets by a large margin, so I am trying to understand RE investing and come up with a ball park Annualized Return on Investment. Do any of you have a calculator or Excel sheet that you would be willing to share that will help me calculate a AROI?

Also, what percentage of operating income is expected to be booked for maintainence on these sort of units?

Thanks!
Sr. Member
Aug 6, 2011
510 posts
204 upvotes
deadsea wrote:
Feb 5th, 2019 12:04 pm
Hello All:

Looking for some advise for all the seasoned real estate investors on this thread.

I have been searching for a multi level property in golden triangle area for rental income and found this property: https://www.realtor.ca/real-estate/2019 ... n-triangle.

What are you thoughts on this? Heating is baseboard so that is an obvious issue (?). And, the property has heritage designation since is 100+ years old.

Over the past 5 years, I have looked at investing in RE but my calculators have always favored the equities markets by a large margin, so I am trying to understand RE investing and come up with a ball park Annualized Return on Investment. Do any of you have a calculator or Excel sheet that you would be willing to share that will help me calculate a AROI?

Also, what percentage of operating income is expected to be booked for maintainence on these sort of units?

Thanks!
It's a nice building. Price reflects the prime location, which has high chance of attracting professional tenants. And it'll always remain desirable no matter the state of economy. I suspect most buyers of that type of properties will live in it, so ROI is not important. But too expensive for me, given the rent I can get from it. Generally, I try to find properties that cashflow neutral (expenses = income) at minimum with downpayment 20%. With leverage, I expect 15% return per year on average, when counting the appreciation 2% on property and lower mortgage balance, with refinancing every 5 years. The first few years after purchase, the return might be less because of the cost of fixing different broken things. But I'm holding for long term, so those costs will be diluted. Also, rent increase over years, so the cashflow becomes eventually positive. I'd say it's not worth investing in RE if holding less 5 years, unless speculation, but it's difficult game to play. The longer, the better.

Personnally, I stick to areas within greenbelt, with excellent transit, close to colleges, commercial stores, average income, low crime. I found the best ROI is in properties that need TLC or improvements I can do to increase income.

My opinion of Ottawa is investing for growth, not cashflow. If cashflow, I'd look into Gatineau
Deal Addict
Nov 15, 2010
1804 posts
397 upvotes
Is there any place with information about recent sales in Ottawa?
Member
Jul 25, 2008
393 posts
268 upvotes
ottawa
Zoocasa has some info for Ottawa, but for most you need to contact an agent.

I tend to agree that if you're looking for rental cashflow, Golden triangle and Ottawa in general is bad. That property probably has significant speculative upside. If I bought it I might convert to luxury single family townhome to be sold in the 1.5-2m range a few years from now, but that's a capital-intensive and risky proposition.
Deal Addict
Jan 15, 2017
2694 posts
2049 upvotes
Jan stats are out. https://www.oreb.ca/newsroom/januarys-r ... ome-sales/

The good news is that sales volume is up nearly 16%.

"Members of the Ottawa Real Estate Board sold 820 residential properties in January through the Board’s Multiple Listing Service® System, compared with 708 in January 2018, an increase of 15.8 per cent. January’s sales included 611 in the residential property class, a rise of 14.2 per cent from a year ago, and 209 in the condominium property class, an increase of 20.8 per cent from January 2018. The five-year average for January sales is 683.4."

The bad news is that prices for residential class property are practically flat, with an increase of 1.5% YOY:

"The average sale price of a residential-class property sold in January in the Ottawa area was $432,829, an increase of 1.5 per cent over January 2018. The average sale price for a condominium-class property was $283,990, an increase of 7.7 per cent from this month last year.*...The $300,000 to $449,999 range continued to represent the most active price point in the residential market, accounting for nearly 42.5 per cent of January’s sales while 22.7 per cent of sales were in the $500,000 to $750,000 price range."

Great condo prices increases:

"Between $175,000 to $274,999 remained the most prevalent price point in the condominium market, accounting for 54.1 per cent of the units sold."
Member
Jun 7, 2010
208 posts
20 upvotes
danishh wrote:
Feb 5th, 2019 3:38 pm
Zoocasa has some info for Ottawa, but for most you need to contact an agent.

I tend to agree that if you're looking for rental cashflow, Golden triangle and Ottawa in general is bad. That property probably has significant speculative upside. If I bought it I might convert to luxury single family townhome to be sold in the 1.5-2m range a few years from now, but that's a capital-intensive and risky proposition.
I have yet to see a townhome approaching 2M in golden triangle area....a large detached single on a bigger lots, yes. Moreover, if a property has heritage designation (i.e. 100+ years of ), I am guessing you cant do a rebuild.
Member
Jun 7, 2010
208 posts
20 upvotes
Thanks @cyberfreak123!

All great/valid points and looks like I will just continue to watch the market and see what comes up. I do need to diversify my equities haul with some RE in it, however, I am just not finding value proposition that I can in equities (easily).
Deal Fanatic
Jul 4, 2004
5008 posts
1082 upvotes
Ottawa
cyberfreak123 wrote:
Feb 5th, 2019 12:28 pm
It's a nice building. Price reflects the prime location, which has high chance of attracting professional tenants. And it'll always remain desirable no matter the state of economy. I suspect most buyers of that type of properties will live in it, so ROI is not important. But too expensive for me, given the rent I can get from it. Generally, I try to find properties that cashflow neutral (expenses = income) at minimum with downpayment 20%. With leverage, I expect 15% return per year on average, when counting the appreciation 2% on property and lower mortgage balance, with refinancing every 5 years. The first few years after purchase, the return might be less because of the cost of fixing different broken things. But I'm holding for long term, so those costs will be diluted. Also, rent increase over years, so the cashflow becomes eventually positive. I'd say it's not worth investing in RE if holding less 5 years, unless speculation, but it's difficult game to play. The longer, the better.

Personnally, I stick to areas within greenbelt, with excellent transit, close to colleges, commercial stores, average income, low crime. I found the best ROI is in properties that need TLC or improvements I can do to increase income.

My opinion of Ottawa is investing for growth, not cashflow. If cashflow, I'd look into Gatineau
I actually disagree. I don't have statistics but based on my observations, most of the listings that come up in the area are investment / rental properties rather than properties made for owner occupancy (i.e. larger homes that have been separated into multiple units). If you want to rent on AirBnb (which is not for everyone), I think you could do okay with something like this ($8k + / month (actually I think $10k/month is realistic)) but personally I would look for a triplex or four unit which would give you quite a bit more income for not that much more investment and because you have more units, your income is more stable (with 2 units, if one is empty for 10 days, that makes a significant difference in your monthly income. with 4 units, even with vacancies in 1 or 2 units during the month, you are still getting constant income). Not sure what you'd get renting it as a long term rental (currently rented for about $3200 / month total but I'm not really familiar with rents in the area so I'm not sure how much more you could get out of it (my gut feeling is that it's a bit low and you could probably get $4k+/month).

If you are interested in this area, properties tend to move quite quickly (This one has been on the market for a couple of months but the price was reduced a bit and it was conditionally sold shortly after and it just returned to the market (maybe something came up during the inspection, maybe the buyer got cold feet, maybe the buyer couldn't get his financing, etc). I don't believe there are any other multiple-unit listings available at the moment in Golden Triangle and Centretown east of Kent / North of 417.
Last edited by michelb on Feb 6th, 2019 9:13 am, edited 1 time in total.
[OP]
Deal Addict
Nov 26, 2004
2320 posts
412 upvotes
cyberfreak123 wrote:
Feb 5th, 2019 5:56 pm
Slow rise in Ottawa house prices despite collapse in inventory
https://ottawacitizen.com/business/loca ... -inventory
I wonder if it is because the Realtors are not telling the clients to push the envelops in exchange for an easy sell.

After all, let's say if all sellers raises their asking prices by 15% overnight, two things may happen,
(a) The market may seize because buyers resist to pay higher prices.
(b) Buyers pays more because of better product selections as more sellers put their property on the market because of favorable prices .

I suppose this is why in the last couple of years, prices of new constructions has gone up faster than resales. The builders just keeps pushing the envelop whereas the listing realtors tell their clients to list the property at the last comparable sold price, This way, they will be able to get an easy sell, plus marketing material as they sold their client's property in 2 days for 105% of the list price.
Sr. Member
Aug 6, 2011
510 posts
204 upvotes
cyberfreak123 wrote:
Feb 5th, 2019 5:56 pm
Slow rise in Ottawa house prices despite collapse in inventory
https://ottawacitizen.com/business/loca ... -inventory
These stats caught my attention:
-new constructions 7,600 in 2018. This compares with 17,500 residential properties and condos resold through the multiple listing service in 2018. (probably those new houses are not included in the "average" price published by OREB?)
-The average benchmark price for a single-family home in Ottawa last month was $434,700 — up 7.3 per cent year over year. So we still have a price increase Year over Year. (it's possible that the stress test force buyers to lower their budget, thus lower cost houses do better, so this may impact the "average" number. So after adjusting this bias, we can get apple to apple comparison.)
-The expensive neighborhoods didn't do as well as the cheaper ones. There's a catch up game here.
Deal Addict
Nov 13, 2013
1763 posts
726 upvotes
Ottawa
William W wrote:
Feb 6th, 2019 9:02 am
I wonder if it is because the Realtors are not telling the clients to push the envelops in exchange for an easy sell.

After all, let's say if all sellers raises their asking prices by 15% overnight, two things may happen,
(a) The market may seize because buyers resist to pay higher prices.
(b) Buyers pays more because of better product selections as more sellers put their property on the market because of favorable prices .

I suppose this is why in the last couple of years, prices of new constructions has gone up faster than resales. The builders just keeps pushing the envelop whereas the listing realtors tell their clients to list the property at the last comparable sold price, This way, they will be able to get an easy sell, plus marketing material as they sold their client's property in 2 days for 105% of the list price.
Yes I think this is very observant and also reflects Ottawa mentality. I had two colleagues looking last summer who participated in several bidding wars but the actual sold price was only a few % above asking. People in Ottawa are very nervous about overpaying. One place had like 20 offers. Going a bit higher might have won them the house and they will probably pay more this summer anyway.

Top

Thread Information

There are currently 2 users viewing this thread. (2 members and 0 guests)

arbytor, amd9394