Ottawa shines not only because it is the capital of Canada, but because of the city’s reputation as a fast-growing economic hub. As more jobs and amenities are added to this city, real estate demand continues to spike. However, earlier in the year the pandemic created a string of unprecedented challenges for the Ottawa housing market. Fortunately, agents alongside homebuyers and sellers were able to quickly pivot and relied on technology to maintain activity. This shift has contributed to the overall growth of the city’s real estate market, with price gains seen across most property types.
Although, as we progress into the colder months and a second wave of COVID-19, some experts have warned of a potential slowdown of this hot real estate market. That being said, considering the unpredictable nature of the coronavirus this year, most will agree that nothing is completely set in stone as far as real estate activity goes.
Here’s why Ottawa’s housing market continues to experience price gains in spike of the national public health crisis.
Housing Market Pricing Figures in Ottawa
The summer months in Ottawa pointed to a hot real estate market as pent-up demand from the spring home-buying season caused homebuyers to start their home search fashionably late.
In October, the average sale price of a house in Ottawa was $603,253. This is a 25-per-cent increase from October of 2019. Condos are similarly experiencing an increase, up 16 per cent over October 2019. These price gains indicate a strong Ottawa housing market, regardless of the coronavirus pandemic. Despite the local housing market slump witnessed earlier this year, signs that the market was rebounding started to become evident by the summer, as control over the virus increased.
Reasons for Housing Market Price Gains in Ottawa
Price gains in Ottawa have been notes, particularly in the suburban regions where homebuyers can get better value for their dollar.
In the Ottawa market, coronavirus social distancing measures have influenced people’s shifting lifestyle preferences, a trend that has been witnessed country-wide. Those who were confined to small living spaces are now eager to secure more room to accommodate their new lifestyles, with many homes now serving multi purposes, as dwellings in addition to remote work, home schooling, fitness, entertainment, and more.
While public health measures to prevent a second wave outbreak have caused city amenities like restaurants, bars, sports complexes and movie theatres to close, this left many urban dwellers questioning if city-living has lost some of its lustre.
As more people crave larger floor plans with ample living space, the shift from urban condos to suburban houses has been prevalent. These suburban neighbourhoods offer homebuyers more green space in the form of backyards, front porches, and local parks to enjoy the outdoors. Remote working arrangements have also scratched commute times off of the priority list for home seekers, increasing the appeal of communities outside of the city core.
Low Inventory in the Ottawa Housing Market
An important reason why Ottawa is experiencing price gains is because of the low housing inventory in the city. October did see slight reductions from September in regard to home sales and new listings. The supply of residential property types is down 46 per cent compared to October 2019. Meanwhile, the inventory of condo properties for sale has increased 15 per cent since October 2019.
A few sociocultural trends could also be cited as reasons why the Ottawa market is seeing price gains and low inventory, causing increased competition.
The city of Ottawa is attracting many newcomers contributing to a growing population. The Millennial generation, now in their home-buying years, is causing increased demand for homes right now. Meanwhile, Baby Boomers are being welcomed into the retirement phase of their lives and are looking to downsize. The public health crisis has in fact pushed some to retire early, increasing the pool of hopeful homebuyers in Ottawa, and in other local markets across the country.
As a result of the low inventory within the Ottawa housing market, the overall demand in the market has put upward pressure on Ottawa housing prices, with homes selling faster than ever before.
Low Interest Rates and Financial Assistance Propelling Demand
Early in the pandemic, the government of Canada was quick to provide financial assistance to those struggling with job loss or other hardships. This has helped those with mounting household debt, to take control of their finances and could be another driver for home ownership, despite the virus.
Another reason that homebuyers may be keen on purchasing a home in Ottawa during the pandemic is because the Bank of Canada reduced the interest rate to 0.25 per cent. This is a record low. Homebuyers who faced challenges borrowing money before, can now secure a mortgage loan at a reduced cost.
Based on recent trends and projections, it’s clear that the Ottawa housing market continues to attract homebuyers. This city has plenty to offer and this trend is persistent, despite COVID-19. A reflection of this demand is continued price gains, indicating strong competition in the market.