The birds are singing, the bees are buzzing, the temperatures are rising, and Canadians are busy buying homes. Spring is usually one of the busiest seasons for the Canadian real estate market, with many eager to settle down in time to enjoy summer in their new abode. But the spring 2021 home-buying season is being set up as perhaps the most successful one on record, particularly as the COVID-19 public health crisis continues to wind down. And the Ottawa real estate market is already off to a hot start, compared to the same time a year ago.

With interest rates sitting at historic lows, housing inventories at a record slump, and demand only intensifying, the nation’s capital is setting itself up to have one of the best performances in either the Ontario real estate market or broader national industry.

How did the Ottawa real estate sector perform in April? Let’s comb through the data to find out.

Ottawa Real Estate | The Nation’s Capital Continues to Soar

According to the Ottawa Real Estate Board (OREB), residential sales surged 164 per cent year-over-year in April for a total of 2,402 properties. This is above the five-year average of 1,830 total unit sales.

Home prices surpassed the national average, climbing at an annualized rate of 42 per cent to $743,204. For condominiums, the average sale price advanced 30 per cent to $427,145.

However, according to Ottawa Real Estate Board President Debra Wright, these numbers “are vastly skewed” since the first state of emergency last year affected the overall housing market. Moreover, Wright contends that the province’s strict lockdown order had an impact on the housing market, adding that once Queen’s Park lifts the stay-at-home order, there will be pent-up supply, which could help ease prices in the coming months since it would add to housing stocks.

At the same time, Wright believes that it will be challenging to predict this market due to the growing number of factors that could influence the Ottawa real estate market.

“On the one hand, record low interest rates, increased household savings, a strengthening economy, and a continued focus on living space during the pandemic are all factors that bolster demand, while steady price growth is encouraging more sellers to list their home,” she said.

“On the other hand, some people are truly struggling, and small businesses are closing their doors. It’s complicated, it’s out of balance, and the course of our local market is not entirely predictable at this time.”

Perhaps a peek into the fundamentals will serves as a better gauge as to where the Ottawa real estate market is headed over the next several months.

Supply and Demand in the Ottawa Housing Market

In the aftermath of the first wave of the coronavirus pandemic, real estate agents and the business media were focused on sales activity and soaring housing prices from pent-up demand. Now that this pent-up demand has been exhausted, industry observers are concentrating on a few key metrics, including listings and starts.

According to OREB, the number of new listings totalled 2,798, higher than the five-year listing average. The last time this figure was reported was in July 2020.

Months of inventory for single-detached homes was 0.6 at the end of the first quarter of 2021, down from 1.9 months in the January-to-March period of last year. This is considered an imperative measurement since it reflects the number of months it would take to sell present supplies at the current rate of sales activity.

Housing starts had surged to all-time highs in 2020, but the Canada Mortgage and Housing Corporation (CMHC) believes that they could taper off this year amid sliding demand for new rental units. In its latest market outlook, it alluded to mounting job losses for young Canadians in low-paying industries and the steep drop in immigration.

Overall, the CMHC forecasts that the housing starts could hit as much as 9,300 this year. Looking ahead, housing starts could reach 9,550 in 2022 and 9,900 in 2023.

“The unprecedented peak in apartment starts in 2020 is not expected to be replicated, due to the large number of units currently under construction,” analyst Anne-Marie Shaker wrote in the report. “Conversely, it is expected that single-detached and row home starts will continue to grow this year, albeit not at a level that would offset the effect of a decline in apartment starts on overall activity.”

In its monthly snapshot, the CMHC reported that housing starts totalled 970 in April, raising the year-to-date number to just below 3,100. This is up from 2,515 the same time a year ago. Completions reached 583, while total absorptions rose to 621.

Will the Ottawa Real Estate Market Crash Soon?

The question on everyone’s mind is: will the Ottawa real estate market crash soon? This could be difficult to prognosticate since there are plenty of factors that need to be calculated. That said, the Ottawa housing market is notably different than the other ultra-hot housing markets of Toronto, Vancouver, or Montreal. Ottawa is dominated by two sectors: government and technology – both of which can be performed remotely from your kitchen table or living room. As a result, there will be more demand for living space, but the competition for limited properties will intensify in the nation’s capital without adequate inventories.