Ottawa Should Be a Balanced Market in 2024

The Ottawa housing industry is projected to remain in balanced territory while prices rise at a modest pace and sales activity slows, according to the 2024 RE/MAX Housing Market Outlook (HMO) report.

This year, the Ottawa real estate market is forecast to see the average sales price rise two percent to $737,968, the report stated. Conversely, the sales transactions are predicted to drop by four percent.

Over the next 12 months, industry observers believe that move-up and luxury homebuyers will consider smaller single-detached residential properties and townhomes as above-trend inflation and higher borrowing costs impact their wallets. This would make these two types of homes the most in-demand in the Ottawa real estate market.

However, housing developers note that single-detached homes and townhouses on smaller lots are not moving as fast as some had expected. This has been mainly driven by pricing concerns.

First-time homebuyers and downsizing seniors could prop up the condominium market in 2024.

In today’s economy, homebuyers are trying to get the best bang for their buck, says Chelsea Hamre, Realtor and Sales Representative, RE/MAX AFFILIATES LTD.

“Purchasing habits have shifted because of high interest rates. We’re seeing more buyers hold off on purchasing until the next year, while being more particular with what they’re looking for. There’s no longer that factor of feeling like you’re missing out, as many are seeking value for their money,” Hamre stated in the report. “The lack of inventory is also impacting market activity – buyers simply have less to choose from. Especially as more condominium builds destined for sale have been converted into rentals as the city continues to increase affordable housing.”

Meanwhile, the Ottawa real estate market is experiencing immense suburban sprawl, with developers inserting parks, dog parks, and trails in mixed-use community construction projects, making them roughly ten minutes away from local amenities.

Looking ahead, housing experts say that the three most sought-after neighbourhoods in Ottawa will be Orleans, Kanata/Stittsville, and Barrhaven/Riverside South.

Ottawa Sees Stability Amid Supply Growth

In the home stretch of 2023, the Ottawa housing market witnessed slower sales activity and slightly higher prices.

According to the Ottawa Real Estate Board (OREB), residential property sales slipped 1.6 percent year-over-year, totalling 724 units in November. Historically, home sales were nearly 32 percent below the five-year average and more than 27 percent below the decade average for this time of the year.

The MLS® Home Price Index (HPI), which is considered a more accurate measurement than average and median gauges, edged up at an annualized pace of 1.4 percent to $628,900. Average prices slid close to one percent to $633,138.

Inventories improved to close out the year. The number of new residential listings climbed nearly three percent, totalling 1,428 units. Active residential listings spiked close to 16 percent, totalling 2,752 units.

New and active residential listings were 8.4 percent and 53.9 percent above the five-year average, respectively.

“Sales are performing as expected with the arrival of colder months, and an uptick in new and active listings is bringing more choice back into the market,” said OREB President Ken Dekker in a statement. “While more choice may mean the pace of buying and selling has slowed, that doesn’t mean people looking to enter or upgrade in the market should sit back.”

New housing construction was mixed, with a lot of late-year growth.

Canada Mortgage and Housing Corporation (CMHC) data show that housing starts surged 55 percent year-over-year in November to 826 units. On a year-to-date basis, housing starts fell 24 percent year-over-year to 8,445 units.

What About the Rest of Ontario?

So, how are other major Ontario real estate markets expected to perform in 2024?

In the Greater Toronto Area, the 2024 RE/MAX outlook forecasts that prices will slide three percent to below $1.1 million while sales will spike more than ten percent.

The Hamilton housing market is expected to see the average selling price jump by 3.5 percent to nearly $832,000, with sales estimated to inch higher by two percent.

Durham Region is projected to witness the average sales price drop five percent to below $898,000. Sales are forecast to swell by two percent.

“Despite cost of living becoming a more prominent consideration for homebuyers and sellers, additional emerging liveability trends in Ontario include the desire for greater access to public transportation and green space, as well as proximity to preferred schools,” the RE/MAX report stated.