Real Estate

Ottawa and Surrounding Area Real Estate market discussion

  • Last Updated:
  • Jan 16th, 2021 4:59 pm
Member
Jan 10, 2012
217 posts
64 upvotes
Ottawa
Given that the CMHC does not insure 1M+ houses, is there a demand difference between slightly less and more than 1M dollars mark? Or the people buying 1M houses do not usually need CMHC insurance?
Deal Addict
Jan 15, 2017
3613 posts
2969 upvotes
freeman93 wrote: I just cannot understand their Ottawa prediction, I am all for understanding the uncertainty behind what's to come... but how on earth can you state they believe housing sales to decrease by 10% in Ottawa when there have been no announcements of lost jobs in the federal public service, and no crazy layoffs in the high tech sector of Kanata. In addition to Ottawa being the hottest market just pre-covid.
The prediction is for the overall market where prices are still trending down. The true test will be the Fall and early Winter when the CERB ends, mortgage deferrals end and the gov't has to start to deal with the deficit.
Member
Aug 22, 2016
391 posts
205 upvotes
raaaaam wrote: Given that the CMHC does not insure 1M+ houses, is there a demand difference between slightly less and more than 1M dollars mark? Or the people buying 1M houses do not usually need CMHC insurance?

CMHC insurance comes with a large premium. Best is to avoid for such high priced houses. you can run a check for how much the premium is for a 950K and see how much the premium comes too.
Newbie
Mar 1, 2020
11 posts
5 upvotes
jk9088 wrote: Well, the Urbandale town on Rowers Way that Fela80 posted about just sold for an eye-watering $642k (!!!), and I noticed another town on Stargazer by Richcraft sold last week for $590k (not quite $600k but close enough). So it's clearly not just HN Homes models going for this much in RSS.

Granted, all of these are premium models (square footage larger than some smaller detached), fully loaded with top-notch upgrades, and built in the last few years so very new. Kanata/Barrhaven certainly offer a far more older, less-upgraded mix of houses. Perhaps these same houses if placed in Kanata/Barrhaven would also fetch similarly crazy amounts and we just haven't seen examples of those hitting the market yet. Difficult for me to imagine but the RE market has been continually skyrocketing past my expectations the last year or two, so who even knows...

Although these crazy prices do seem to indicate that many buyers today don't care whether a house is detached or a townhouse, as long as it has the size/layout they like inside the house. And also seems that buyers are really drawn in by the newness, flashy upgrades and fancy features.
$642K that is insane! I think the upgrades maybe justified it. Plus the home is sitting on a big lot and the area is surrounded by trees. The base price for that model by urbandale is now $565K in Findlay Creek and last year this time the same model was going for $495K. For $642K though I would rather buy a single home.
Member
Jul 15, 2019
384 posts
266 upvotes
skeet50 wrote: The prediction is for the overall market where prices are still trending down. The true test will be the Fall and early Winter when the CERB ends, mortgage deferrals end and the gov't has to start to deal with the deficit.
I don't understand what you mean about prices are still trending down...this isn't the case in ottawa right now. Even if the current situation has no barring on what is to come in the fall and early winter, the market showcased an increase in May as opposed to that of April. Meaning even if only for a temporary moment prices are currently trending up.

I agree the true test won't be until the fall and early Winter, but in Ottawa we are going to see less of an impact from that due to the number of job losses being much smaller in comparison to other areas of Canada. Prior to the pandemic Otttawa-Gatineau stood at 4.3% unemployment and is now at 6.9%... just shy of only a 3% unemployment increase, and the 3rd lowest in all of Canada.

I am not here to say that prices won't fall, nor here to say that prices will not rise. Things are just far too uncertain at the moment. What I cannot understand is based on the explication they provided for the Ottawa area, how on earth they came up with a 10% decrease. Some of the other cities I am fully onboard an actually agree with the prediction. But, the Ottawa prediction and reasoning behind their decision seems very out of touch with Ottawa's market.

Until we have any large announcements for job losses in Ottawa, I cannot see such a drastic drop(one of the worst city drops according to CMHC) happening.
Deal Addict
Jan 15, 2017
3613 posts
2969 upvotes
freeman93 wrote: I don't understand what you mean about prices are still trending down...this isn't the case in ottawa right now. Even if the current situation has no barring on what is to come in the fall and early winter, the market showcased an increase in May as opposed to that of April. Meaning even if only for a temporary moment prices are currently trending up.

I agree the true test won't be until the fall and early Winter, but in Ottawa we are going to see less of an impact from that due to the number of job losses being much smaller in comparison to other areas of Canada. Prior to the pandemic Otttawa-Gatineau stood at 4.3% unemployment and is now at 6.9%... just shy of only a 3% unemployment increase, and the 3rd lowest in all of Canada.

I am not here to say that prices won't fall, nor here to say that prices will not rise. Things are just far too uncertain at the moment. What I cannot understand is based on the explication they provided for the Ottawa area, how on earth they came up with a 10% decrease. Some of the other cities I am fully onboard an actually agree with the prediction. But, the Ottawa prediction and reasoning behind their decision seems very out of touch with Ottawa's market.

Until we have any large announcements for job losses in Ottawa, I cannot see such a drastic drop(one of the worst city drops according to CMHC) happening.
This link shows prices still trending down from the peak of Week 10 which was March 7th. Yes, the last couple of weeks have shown some weekly increases, but overall, prices are still down. https://content.oreb.ca/matrix/stats/index.html

After reading the actual CMHC report, they conclude that prices will decrease because:

1. Overall construction starts are down and expected to remain lower than pre-pandemic levels. Housing composition is expected to remain focused on multi-units due to an increase in the price of single family homes,
2. Job recovery and immigration remain uncertain and will dampen demand for resale homes. Yes, the federal public service hasn't announced any layoffs, but the unemployment rate still increased in Ottawa during the crisis,
3. "As the economy recovers, resale market activity should trend higher in 2022 but will remain in a range below the 2019 historical peak. Prices will continue to trend lower, under both optimistic and pessimistic scenarios in 2021, on weaker demand for homeownership due to job and income losses. As demand slowly recovers in 2022, it is anticipated that price growth will recommence due to supply constraints"
Deal Addict
Nov 13, 2013
2364 posts
1152 upvotes
Ottawa
arbytor wrote: CMHC insurance comes with a large premium. Best is to avoid for such high priced houses. you can run a check for how much the premium is for a 950K and see how much the premium comes too.
Well it's always best to avoid by that logic. I think in Ottawa it is not as much of an issue but in Toronto where it might be $2million for a "normal" house in a semi-desirable area it can be a problem for some younger higher earning couples. For example two young doctors might easily qualify and be able to handle a $1.9 Million loan but have to struggle to come up with even 5% let alone 20%.
Newbie
Jun 21, 2020
2 posts
7 upvotes
Great discussion! These are very interesting times in real estate. I really enjoy reading this forum. Here are my thoughts/observations:

Ottawa housing market:

Ottawa population has been increasing YOY more than the national average for the last few years. Every year the demand continues to exceed the supply more and more. Even if migration into the city decreased substantially and our population remained the same, it would take years for the supply to catch up with the demand. Also, due to the pandemic, new housing starts have decreased significantly which doesn’t help in adding more supply to the market. With regards to the mortgage deferrals, I have yet to meet anyone who’s actually taken one. I don’t think most homeowners in Ottawa have been affected a whole lot financially, or at least not enough of them to have any affect on prices. In a nut shell I think the supply and demand fundamentals that existed before the pandemic are still present and the sales data that’s come out recently shows strong confidence in the Ottawa housing market. I just don’t see decreases in price happening at least for the next couple years.


Rental Market

Most of my rental units are student rentals near Algonquin. I had 4 units give me notice at the end of March due to the pandemic. I was very nervous at the time however all 4 units ended up renting with rents increased and no vacancy between tenants at all of them. New tenants are all in programs that are doing online and in class 50/50 in the fall dental hygiene, fitness programs to name a couple. The still need to be relatively close to campus. Last summer units were renting within days, that’s certainly hasn’t been the case right now, but there is still enough demand to fill units and even increase rents. People are saying investors will be panicking and selling off units. I really don’t see this happening. I know allot of investors since it’s what I do for a living, and they haven’t really been affected too much. I’ve seen some convert short term rentals to long term and take a little less cash flow but that’s about it. Real estate investors are in it for the long haul. Most are prepared for difficult times, if you can even consider this a difficult time. Plus the equity investors have gained in the last few years puts them in a great position even if prices did decrease. Even if you’re deep into student rentals, you’re not going to sell off $700k+ properties because schools are going online for 1 semester.

Anyway, people will latch on to articles and data that support which direction they want the market to go, but looking at the situation objectively and understanding what has been driving prices/demand the last few years, I just don’t see things slowing down significantly any time soon. Ottawa has proven to be a very resilient housing market through difficult times which is a big reason why I choose to invest here.
Sr. Member
Apr 18, 2017
514 posts
222 upvotes
Ottawa
A bit suspicious that the last two bullish posts have come from accounts with less than 3 posts.

Starting to seem like the broader RE threads on RFD...
Deal Addict
Sep 2, 2009
1250 posts
900 upvotes
Ottawa
skeet50 wrote: After reading the actual CMHC report, they conclude that prices will decrease because:

1. Overall construction starts are down and expected to remain lower than pre-pandemic levels. Housing composition is expected to remain focused on multi-units due to an increase in the price of single family homes,
That's quite the packed statement. If re-read: house prices will decrease because single family home prices will increase.

One interpretation is that the desire for multi-family style housing (cheaper end) will be higher because single-family (more expensive end) will increase in price.

Averages at work!

To butcher it another way: CHMC is saying that single family homes are going to be increasing in price.

(Disclaimer: I have not looked at the report nor source data)
Sr. Member
May 23, 2017
997 posts
747 upvotes
Not saying I definitely don't expect prices to go down (and I wouldn't be too bothered by it anyways as I am planning to hold onto all my current properties for quite awhile anyways), nor that CHMC is being too pessimistic as a whole (in fact it is probably the "safe" prediction given that we are going through a worldwide pandemic), however I am rather baffled/curious how they came to the conclusion that Ottawa will be the second-worst city affected after Edmonton. That part confuses me as I see no reason why it should fare much worse than most other Canadian cities, and the article really does not give solid reasonings either. If they predicted a 10% drop for Ottawa but also the same for Montreal and Toronto etc, I wouldn't really question it.
Sr. Member
May 23, 2017
997 posts
747 upvotes
On the topic of the townhouses: I find it quite interesting as I used to think there was no point in "over-upgrading" a townhouse because I figured there would be a price ceiling to townhouse prices and you could never get your money back from the excessive upgrades. I assumed that at a higher price point, people would rather pay for a detached instead.

However, these glitzy expensive RSS townhouses are making me change my mind about that. Seems like there really is no price ceiling to townhouses after all, and the ROI on glamming it up is actually a pretty good idea because buyers these days will gladly fork over extra money for fancy features. The gap between townhouses and detached just seems to continue to narrow...really doesn't seem like space between your house and your neighbours is that valued right now. Will be interesting to see if these trends continue...
Deal Addict
Nov 13, 2013
2364 posts
1152 upvotes
Ottawa
xxxronjames wrote: A bit suspicious that the last two bullish posts have come from accounts with less than 3 posts.

Starting to seem like the broader RE threads on RFD...
The Ottawa ones seem to be legit. Yes maybe they registered to put their stamp down as are a bit nervous but I suspect the content is at least true. Some of the other threads have totally made up anecdotes.
Deal Addict
Jan 15, 2017
3613 posts
2969 upvotes
jk9088 wrote: Not saying I definitely don't expect prices to go down (and I wouldn't be too bothered by it anyways as I am planning to hold onto all my current properties for quite awhile anyways), nor that CHMC is being too pessimistic as a whole (in fact it is probably the "safe" prediction given that we are going through a worldwide pandemic), however I am rather baffled/curious how they came to the conclusion that Ottawa will be the second-worst city affected after Edmonton. That part confuses me as I see no reason why it should fare much worse than most other Canadian cities, and the article really does not give solid reasonings either. If they predicted a 10% drop for Ottawa but also the same for Montreal and Toronto etc, I wouldn't really question it.
Have you read the report?
Deal Addict
Jan 15, 2017
3613 posts
2969 upvotes
cloak wrote: That's quite the packed statement. If re-read: house prices will decrease because single family home prices will increase.

One interpretation is that the desire for multi-family style housing (cheaper end) will be higher because single-family (more expensive end) will increase in price.

Averages at work!

To butcher it another way: CHMC is saying that single family homes are going to be increasing in price.

(Disclaimer: I have not looked at the report nor source data)
I don't interpret the comment that way. I read it as housing starts are down because demand for new housing is down. New housing composition is expected to be be focused on multi-units due to the lack of affordability of single family homes. I don't interpret this to mean that single family homes will increase in price - only that new single family homes (as it is discussing housing starts) are not as much in demand as new multi-unit homes are. New home builders are building multi-unit homes as that is where there is increased demand.
Sr. Member
May 23, 2017
997 posts
747 upvotes
skeet50 wrote: Have you read the report?
I admit I have not read the full report as it is quite long and I don't have the time right now to go through the whole thing, however I did read the Ottawa section. These seem to be the main points on why CHMC predicts a drop in house prices in Ottawa:

"The uncertain outlook for job recovery and immigration will dampen demand for resale homes into the latter half of 2021."
"Prices will continue to trend lower, under both optimistic and pessimistic scenarios in 2021, on weaker demand for homeownership due to job and income losses."


I fail to see how Ottawa fares worse in this regard compared to other cities. Obviously the future is uncertain, but as other people have already pointed out, if anything it seems like jobs in Ottawa should be more stable and therefore less affected than other regions in Canada. Most job and income losses have occurred in people making lower incomes and therefore do not affect housing prices as much (people with higher incomes such as in government, tech, and healthcare are weathering the pandemic extremely well, at least when it comes to income). In terms of immigration, I did not see solid data that there will be a net loss in population in Ottawa over the next year or two (I agree there will be far less people coming here due to the pandemic, but will we really be having an outflow of people from the city?).

Furthermore, the report also says the following (which we have all seen happen):

"As the crisis began to unfold in March 2020, sales plummeted by half and listings followed suit, so that prices continued to grow, albeit at a slower rate. The Ottawa market remained in sellers’ market territory in April as listings continued to fall short of demand."

Obviously this section only refers to the past few months and is not a predictor of the coming months, but again I am not seeing anything solid in this section of the report that would convince me that Ottawa will be the 2nd-worst city when it comes to house prices in the next year or two.

Note: I did not independently verify whether that article correctly reported the CHMC % drop in different cities so I just assumed it was correct. I do notice the CHMC report does not actually state that Ottawa prices will drop by 10%. There is data at the end of the report and again I assumed the article calculated the numbers correctly for the different cities.
Sr. Member
Nov 6, 2007
717 posts
235 upvotes
jk9088 wrote: I admit I have not read the full report as it is quite long and I don't have the time right now to go through the whole thing, however I did read the Ottawa section. These seem to be the main points on why CHMC predicts a drop in house prices in Ottawa:

"The uncertain outlook for job recovery and immigration will dampen demand for resale homes into the latter half of 2021."
"Prices will continue to trend lower, under both optimistic and pessimistic scenarios in 2021, on weaker demand for homeownership due to job and income losses."


I fail to see how Ottawa fares worse in this regard compared to other cities. Obviously the future is uncertain, but as other people have already pointed out, if anything it seems like jobs in Ottawa should be more stable and therefore less affected than other regions in Canada. Most job and income losses have occurred in people making lower incomes and therefore do not affect housing prices as much (people with higher incomes such as in government, tech, and healthcare are weathering the pandemic extremely well, at least when it comes to income). In terms of immigration, I did not see solid data that there will be a net loss in population in Ottawa over the next year or two (I agree there will be far less people coming here due to the pandemic, but will we really be having an outflow of people from the city?).

Furthermore, the report also says the following (which we have all seen happen):

"As the crisis began to unfold in March 2020, sales plummeted by half and listings followed suit, so that prices continued to grow, albeit at a slower rate. The Ottawa market remained in sellers’ market territory in April as listings continued to fall short of demand."

Obviously this section only refers to the past few months and is not a predictor of the coming months, but again I am not seeing anything solid in this section of the report that would convince me that Ottawa will be the 2nd-worst city when it comes to house prices in the next year or two.
I agree. I also fail to see the direct correlation between job losses in retail, hospitality and the gig economy on the downward trend of housing prices at least in Ottawa. These folks (no disrespect) were never amongst the active buyer pool to begin with. Rentals, rent deferral, rental income, yes. But 1/2 million dollar owner occupied homes not so much.

The fundamentals I believe are still there from the stability of the feds, military, tech and health care to absorb the limited supply without having an adverse effect on prices.

Some will argue that recession and DRAP 2.0 is coming with significant cuts to the public service and all those who serve it in the NCR.

However, we have to weather through the storm first. In my opinion any significant cuts to the public service is likely 2+ years away. Another electection platform, another government and quite a bit of time to get the bureaucracy and the machinery of government organized ...
Newbie
Jun 21, 2020
2 posts
7 upvotes
jk9088 wrote: I admit I have not read the full report as it is quite long and I don't have the time right now to go through the whole thing, however I did read the Ottawa section. These seem to be the main points on why CHMC predicts a drop in house prices in Ottawa:

"The uncertain outlook for job recovery and immigration will dampen demand for resale homes into the latter half of 2021."
"Prices will continue to trend lower, under both optimistic and pessimistic scenarios in 2021, on weaker demand for homeownership due to job and income losses."


I fail to see how Ottawa fares worse in this regard compared to other cities. Obviously the future is uncertain, but as other people have already pointed out, if anything it seems like jobs in Ottawa should be more stable and therefore less affected than other regions in Canada. Most job and income losses have occurred in people making lower incomes and therefore do not affect housing prices as much (people with higher incomes such as in government, tech, and healthcare are weathering the pandemic extremely well, at least when it comes to income). In terms of immigration, I did not see solid data that there will be a net loss in population in Ottawa over the next year or two (I agree there will be far less people coming here due to the pandemic, but will we really be having an outflow of people from the city?).

Furthermore, the report also says the following (which we have all seen happen):

"As the crisis began to unfold in March 2020, sales plummeted by half and listings followed suit, so that prices continued to grow, albeit at a slower rate. The Ottawa market remained in sellers’ market territory in April as listings continued to fall short of demand."

Obviously this section only refers to the past few months and is not a predictor of the coming months, but again I am not seeing anything solid in this section of the report that would convince me that Ottawa will be the 2nd-worst city when it comes to house prices in the next year or two.

Note: I did not independently verify whether that article correctly reported the CHMC % drop in different cities so I just assumed it was correct. I do notice the CHMC report does not actually state that Ottawa prices will drop by 10%. There is data at the end of the report and again I assumed the article calculated the numbers correctly for the different cities.
I agree with you 100%. If prices were to fall in Ottawa as a result of a recession/pandemic, you would think we wouldn’t be hit as hard as most Canadian cities.

Articles are coming out with all kinds of different predictions for the Ottawa market from one extreme to the other. Even the experts are just guessing like we are. All we can do is continue to look at the data as it becomes available.

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