Ottawa Real Estate Insider -June

Hi Ottawa,

This is my first real estate blog, and I would like to begin by thanking all of you that have made my professional journey as a Realtor ® a very exciting and enjoyable one. I am here to serve you and your loved ones on anything related to real estate in the Greater Ottawa area, whether it is to upsize/downsize your home, find your perfect first home, rent out or find your rental, or simply want to chat, I am just a phone call away!

Market Update

First, I would like to provide you with some latest Ottawa residential real estate market updates.

As of May 2023, the Ottawa real estate market continues to demonstrate stability and growth, despite higher borrowing costs and continued assessment from some experts as overvalued (Ottawa real estate: CMHC warns housing prices to decline for the first time in nearly 30 years | CTV News). Compared to April 2023, the average price has maintained on freehold, single-family properties, while condo prices saw a 2% month-over-month increase. The city's housing market has remained resilient, with a steady demand for properties in both the residential and commercial sectors.

Many of you must be wondering where the great crash is that many analysts predicted at the beginning of 2023, while no one can predict with exactitude what will happen in the future, I can help to decipher some of the underlying factors that are affecting the housing market in Ottawa. I will make a longer series detailing the factors, based on academic research and references, on how different factors can and have influenced the housing market in the past. However, most researchers seem to agree that the following factors are the key contributors to any market-based housing market:

1. Supply and Demand: The supply and demand dynamics play a significant role in determining housing prices. When there is a shortage of housing supply relative to the demand from homebuyers, prices tend to rise. Factors such as population growth, immigration, and changes in household formation contribute to the demand side. In contrast, factors such as land availability, construction costs, and government regulations influence the supply side.
2. Interest Rates: The level of interest rates has a direct impact on housing affordability and prices. Lower interest rates make mortgages more affordable, enabling buyers to afford higher-priced homes and increasing demand. Conversely, higher interest rates increase borrowing costs and can dampen housing demand, potentially putting downward pressure on prices.
3. Economic Factors: Economic conditions, such as employment levels, wages, and overall economic growth, influence housing prices. Strong economic growth and job opportunities tend to drive housing demand and support higher prices. Conversely, economic downturns or job losses can weaken demand and lead to price declines.
4. Government Policies and Regulations: Government policies and regulations, including mortgage rules, taxation, and zoning regulations, can significantly impact housing prices. Measures that promote homeownership, such as first-time homebuyer incentives or relaxed mortgage regulations, can stimulate demand and drive prices up. On the other hand, policies aimed at cooling the market, such as foreign buyer taxes or stricter mortgage stress tests, can moderate price growth.

Ottawa, and by extension Canada, has seen a steady increase in immigration targets post-COVID-19 (Ottawa raises immigration targets with new goal of 500K per year by 2025 - National | Globalnews.ca), and will continue to do so for the foreseeable future. This will undoubtedly increase demands for housing, as more and more new Canadians come from abroad to settle in major urban areas. The supply side is a bit more unclear, while some news indicates increased activities, others show difficulties in getting construction started due to various factors: (Indications Ottawa's housing market could start rebounding but supply at 20-year low | CTV News and CMHC forecasts 32-per-cent drop in new home construction due to inflation, labour shortages - The Globe and Mail). Nevertheless, unless dramatic actions are taken by different levels of government, it is hard to see a major increase in housing supplies in Ottawa in the short term.

Interest rates tend to affect housing prices more directly. As the Bank of Canada is considering another hike (Bank of Canada rate hike a possibility this week, economists say - The Globe and Mail), it is likely that decision will have some cooling effect on housing prices. Additionally, as household mortgages pre-COVID come to renewal, some families will probably make the difficult decisions between downsizing or reducing consumptions, likely to increase the housing supply.

While the Economic fundamentals in North America remain strong, the increased interest rates, US debt ceiling discussions, and upcoming federal elections can all affect the underlining economics in Ottawa. However, as the biggest employer in the region, the Federal Government has recently provided a 12% salary increase to almost all its workers, Ottawa-Gatineau households are in a much better position comparatively speaking to other metropolitan regions in Canada if there is a mild or major recession.

Lastly, while the Ford government removed a lot of zoning restrictions for modifying residential properties to increase housing supply, the City of Ottawa has yet to implement fully these legislative measures (City of Ottawa looks to speed up planning approvals to meet new provincial timelines | CBC News). While one can assume loosening restrictions can translate into more housing, the City of Ottawa has still outlined in its master plan that it wants to see fewer single families, more density, and more within the urban boundaries to offset the environmental impact. This means that the once iconic bungalow (or even huge, 2-storey single-family units) will become luxurious properties only a few can afford within the City of Ottawa's urban boundaries.

In conclusion, I would suggest that while there are some uncertainties because of future interest rate hike(s) and household debt level, overall economic factors (such as employment and wages), demographic increases, and difficulties in increasing housing supply both from the private sector and government policy constraints are what sustain the Ottawa-Gatineau housing market for the few remaining months of 2023. If you are an investor, I would suggest you work with me and do the maths on your proposed project together; if you are buying for your family as a primary residence, I would suggest not waiting and getting into the market as soon as you can, within your affordable limit. Housing prices will fluctuate, but the overall price to pay for housing (rent or mortgage) is more than likely to continue to increase in the near and mid-term. 

 

Events in June/July in Ottawa

I am a big fan of participating in fun activities in Ottawa, and I always keep track of what’s going on both in my neighbourhood and in the Greater Ottawa area. Here are a few that I think are worth mentioning for the month of June and early July:

• June 8 -18: Ottawa Italian Festival Ottawa Italian Festival 1
• June 10, 10 a.m. to 4 p.m.: 613flea – once a month flea market held in the Lansdowne park
• June 10, 1 p.m. to 10 p.m.: 2023 K-Fest Korean Cultural Centre Canada (korean-culture.org)
• June 10 – 11: Bring your kids to the Bank of Canada Family Fun Weekends - Bank of Canada Museum
• June 13-17: Ottawa Indian Film Festival Ottawa Indian Film Festival Awards (oiffa.com)
• June 24: ByWard Night Market Byward night Market — Marchés d'Ottawa Markets | ByWard Market + Parkdale Market | Ottawa, Ontario
• June 21-25: Ottawa Summer Solstice Indigenous Festival: _Summer Solstice Indigenous Festival - Summer Solstice Festivals
• June 22-25: Ottawa Dragon Boat Festival: Tim Hortons Ottawa Dragon Boat Festival | Home
• June 23-30: Ottawa Jazz Festival: Ottawa Jazz Festival | Ottawa Tourism
• July 1: Canada Day!! Canada Day - Canada.ca

 

Useful information/Tips:

If you want to undertake work to improve your property this year, you should take a look at the latest incentives/interest-free loans from the Government of Canada and the City of Ottawa (Rebate & Incentive Programs – BetterHomesOttawa). My spouse and I benefited from these programs to undertake a big renovation at our house. Ask me for tips!

You can find key engagement activities that the City of Ottawa is currently conducting/or plans to conduct on its website here: Engage Ottawa. I personally participated in some that will affect the upcoming zoning regulations.

When working outside this Summer, be careful of toxic plants (such as Poison Ivy, Giant Hogweed, Wild Parsnip, etc. - Invasive species | City of Ottawa). They can be highly toxic for humans and my family learned the hard way this Summer.

You may also want to replace your Air Handling unit’s filter(s) and continue to monitor your smoke/CO alarms for battery defects. Mold could also be an issue for some, continuous monitoring of your basement moisture is thus important.