Ottawa housing market to favour sellers in 2021, average price expected to rise 7%
The Ottawa housing market currently favours sellers, thanks to low housing inventory and high demand. These conditions are expected to persist in 2021. Low inventory has been a common trend across many Ontario housing markets, putting upward pressure on prices. Indeed, Ottawa homes saw average price rise to $524,956 in 2020 (Jan. 1-Oct. 31) compared to $441,693 in 2019 (Jan. 1-Dec. 31). Looking ahead to 2021, RE/MAX expects Ottawa homes to see average prices increase 7% to approximately $561,702 across all property types.
Inventory levels are expected to improve in 2021, causing days on the market to increase as well.
Move-up buyers, who are typically families, are expected to propel the Ottawa housing market in 2021. Present-day move-up buyers are encountering difficulty purchasing a home, due to low inventory and frequent bidding wars, which are characteristic of this seller’s market.
Move-up buyers are also the driving force behind the luxury property market, which has seen a massive spike in demand since the start of COVID-19. This trend is expected to continue in 2021.
COVID-19 has significantly changed buyer sentiments and wants, with space being the most important must-have for current buyers. This has been a common trend across many Canadian housing markets as well as regions abroad, with many homebuyers seeking more square footage and green space outside of urban areas in the wake of COVID-19. Factors impacting this broader trend include the rise in remote work, the desire for more space and less density, as well as lower housing prices.
Ottawa’s most in-demand neighbourhoods based on 2020 sales are Orleans, Barrhaven and Kanata/Stittsville. Unlike pre-COVID buying, buyers are now less concerned with longer commute times in order to find a property that meets their priorities.
Canadian Housing Market in 2021
Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.
Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down:
35% of RE/MAX brokers indicate that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021
45% of RE/MAX brokers indicate that move-up buyers will likely be a primary driver of the housing market demand in 2021
Half of Canadians (53%) are confident that Canada’s housing markets will remain steady in 2021
52% of Canadians believe real estate will remain one of the best investment options in 2021
“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021.”
In the wake of COVID-19, the typically busy spring season in the Ottawa housing market was delayed until June 2020, according to the RE/MAX Fall Market Outlook Report. At this point when economies began reopening, home sales increased by 2% year-over-year, and average home prices continue to climb, with residential home prices up as much as 14% year-over-year. Price growth is expected to continue.
Lack of inventory and a desire to get into the market has positioned Ottawa as a strong seller’s market. Rural areas in the region have seen an uptick in interest, as buyers look to secure more space and amenities to accommodate a shift toward working from home.
Ottawa’s recreational market has seen a massive increase in interest, with buyers coming from major cities such as Toronto, to access larger properties and more space. Of all the markets within Ottawa, the luxury market is currently performing the best, with those who can afford larger homes looking to move up in the market post-COVID 19.
A 3% increase in the average residential sale price is expected in Ottawa for the remainder of the year.
Ontario Real Estate Trends
What’s been happening across other Ontario real estate markets? With the province being one of the hardest-hit regions in Canada, markets such as Niagara, Mississauga and Kitchener-Waterloo experienced significant drops in activity. However, come June, they bounced back aggressively as economies began to reopen. With all of Ontario now in phase three of re-opening and consumers more comfortable engaging in the market, market activity in Ontario is expected to remain steady in the fall, with modest price increases of up to 6% in some regions.
Leading indicators from RE/MAX brokers and agents across Canada’s housing market point to a strong market for the remainder of 2020. According to the RE/MAX Fall Market Outlook Report, RE/MAX brokers suggest that the average residential sale price in Canada could increase by 4.6% during the remainder of the year. This is compared to the 3.7% increase that was predicted in late 2019.
The pandemic has prompted many Canadians to reassess their living situations. According to a survey conducted by Leger on behalf of RE/MAX Canada, 32% of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. This trend is stronger among Canadians under the age of 55 than those in the 55+ age group. Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44% of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.
Canadians equally split on their confidence in the housing market
Canadians are almost equally split in their confidence in Canada’s real estate market, with 39% as confident as they were prior to the pandemic, and 37% slightly less confident. When it comes to the prospect of a second wave of COVID-19, 56% of Canadians who are feeling confident in Canada’s real estate market are still likely to buy or sell. “The classically hot spring market that was pushed to the summer months due to the COVID-19 pandemic created a surprisingly strong market across Canada and across all market segments,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Looking ahead, government financial aid programs may be coming to an end in September, which could potentially impact future activity; however, the pent-up demand and low inventory dynamic may keep prices steady and bolster activity for the remainder of 2020. Overall, we are very confident in the long-term durability of the market.”Additional highlights from the 2020 RE/MAX Fall Market Outlook Report Survey:
48% of Canadians would like to live closer to green spaces
48% of Canadians say it’s more important than ever to live in a community close to hospitals and clinics
33% of Canadians would like more square footage in their home and have realized they need more space
44% of Canadians want a home with more outdoor space and personal amenities (i.e. balcony, pool etc.)
About the 2020 RE/MAX Fall Market Outlook Report The 2020 RE/MAX Fall Market Outlook Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments.
Seller’s market conditions expected, prices to rise 6%
RE/MAX is forecasting conditions favouring sellers for the Ottawa housing market in 2020. The average residential sale price is expected to rise by six per cent, thanks to existing market momentum, despite the region experiencing greater market stability in the past. Low inventory and a strong buyer pool should put upward pressure on prices going into 2020.
Demand for properties will be driven by move-up, first-time and move-over homebuyers, with Kanata and Orleans being the neighbourhoods to watch in 2020, particularly due to the fact that the LRT is expected to eventually expand to those regions.
Ottawa is currently experiencing a seller’s market due to its low inventory. While the city is generally affordable, higher prices and low inventory is putting pressure on the market, affecting first-time homebuyers. The up-and-running LRT has resulted in surrounding development, particularly high-rise condominiums. Condominiums and townhomes tend to see the most activity in the region, due to their relative affordability compared to other property types.
From a national perspective, RE/MAX anticipates a leveling out of the highs and lows that characterized the Canadian housing market in 2019, particularly in Vancouver and Toronto, as we move into 2020. Healthy price increases are expected, with an estimated 3.7-per-cent increase in the average national residential sales price, according to the RE/MAX 2020 Housing Market Outlook Report.
Most individual markets surveyed across Canada experienced moderate price increases year-over-year from 2018 to 2019. However, some regions in Ontario continue to experience higher-than-normal gains, including London (+10.7 per cent), Windsor (+11 per cent), Ottawa (+11.7 per cent) and Niagara (+12.9 per cent).
“Southern Ontario is witnessing some incredibly strong price appreciation, with many regions seeing double-digit gains,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.”
Lydia McNutt is an award-winning journalist and editor, with almost two decades of experience in the real estate sector. At RE/MAX, Lydia is responsible for developing consumer-facing content while promoting the RE/MAX brand. This includes housing market reports and RE/MAX network news featured on the RE/MAX Canada blog and social media channels. Lydia has been published nationally on topics ranging from real estate, architecture, decor and design, to finance, business, technology, entertainment and lifestyle. When she’s not head-down at her writing desk, Lydia is busy “momming” in Oakville, Ontario, where she lives with her husband, two kids and their chocolate lab, Betty. Email Lydia at email@example.com