While 2020 will go down as one of the worst years in recent history, it will also turn out to be one of the best for the Canadian real estate industry. The country’s housing sector has never experienced anything like it before, from sales activity to residential prices. Every pocket of the Canadian real estate market recorded tremendous growth, including the nation’s capital.
It turned out that 2020 was a sales record-breaker for Ottawa, despite the province’s ebb and flow between lockdown orders of varying severity for the better part of the year. But this has been the theme from coast to coast: the coronavirus pandemic, the short but deep recession, and two million lost jobs failed to send the real estate market spiralling out of control.
Can Ottawa expect a cooling-off period in 2021? If December’s numbers were any indication, one of the nation’s most resilient and stable local economies could enjoy another stellar year.
Canadian Real Estate: Ottawa’s Resale Market Continues to Thrive Amid Pandemic Conditions
According to the Ottawa Real Estate Board (OREB), residential property sales surged 32.4 per cent year-over-year in December, with both single-family homes and condominiums rising 33.7 per cent and 29.2 per cent, respectively.
Prices also soared last month. The average sale price for a residential-class property increased at an annualized rate of 20.6 per cent to $603,880. A condominium-class property enjoyed a 14.4-per-cent year-over-year boost to $355,982.
OREB’s year-end figures highlighted tremendous double-digit growth. Residential properties popped 20 per cent to $582,267, while condominium units gained 19 per cent to $361,337.
“Our market performance in December capped off a year for resales that clearly shows a market that continued to thrive even through the challenges of 2020. December sales brought our year-to-date numbers at year-end to within 2% of 2019. There was a slight slowdown typical of December around the holiday season; however, the market continued its overall momentum and remained more active than usual,” said Ottawa Real Estate Board’s 2021 President Debra Wright in a news release.
So, what happened in 2020 to explain Ottawa’s real estate boom? There were many factors at play within the nation’s capital.
Ottawa’s 2020 Real Estate Boom
OREB data suggested the city endured an inventory shortage last year. Housing stocks are hovering at historically low levels, and the market continually reported hikes in sales and a drop in days-on-the-market. As demand soared in the aftermath of the height of the pandemic’s first wave, supply failed to keep up. This led to multiple offers, bidding wars, and ghost bids for properties.
Homebuyers felt emboldened since historically low mortgage rates increased their purchasing power. Plus, many Ottawa homebuyers came from larger cities like Toronto, where they had enjoyed high returns on their properties, which boosted the amount out-of-town consumers were willing to spend on detached, semi-detached, townhouse or condominium properties.
Reports further indicate that Baby Boomers were active in the market last year, but it was the young first-time home-buying segment that also contributed to the meteoric growth in Ottawa’s housing market.
Agents did a tremendous job throughout the year, too, says Wright.
“At the start of the pandemic, we didn’t know what to expect. We had a momentary stall as did most businesses; however, once real estate was deemed to be an essential service, Realtors® worked with buyers and sellers to ensure safety in the process, and the market picked back up and accelerated past all expectations throughout the remainder of the year,” she added.
Can Ottawa replicate this performance in 2021? The industry experts are confident that the nation’s capital has what it takes to repeat 2020’s noteworthy growth.
Why Ottawa’s Housing Market Can Boom Again in 2021
According to the RE/MAX Ottawa Housing Market Outlook (2021), the market will continue to favour sellers in 2021, with average prices growing seven per cent to just below $562,000 across all property types. The report predicted that move-over buyers, move-up buyers, and first-time homebuyers will be the key drivers for Ottawa real estate this year.
In its December monthly update, OREB’s Debra Wright made a great point that two of Ottawa’s top industries are government and tech – sectors that are both “conducive to working from home.” Since our homes are turning into offices, homebuyers are focusing more on how much space they have for their careers.
“We may have been privileged with lower price thresholds in previous decades, but perhaps the market is now beginning to reflect the real estate property values of a national capital,” Wright said.
But those engaging in the Ottawa real estate market should be aware of the gap between Inner and Outer Ottawa. In 2020, the average price difference between the two regions was about 33 per cent, or $200,000, which can greatly impact budgets.
Still, low interest rates, strengthening demand, and low housing inventory levels will contribute to the sector’s growth. Even if the second wave of the COVID-19 public health crisis extends into the spring, the Canadian real estate market could weather the storm due to supportive measures on the fiscal and monetary side.
“Going forward, I fully expect Ottawa’s resale market will continue to be robust in 2021. There are no indicators to suggest that this is an overheated market – it is simply very active, insulated, and strong. One that has only been mildly shaken by a world-wide pandemic,” Wright concluded.