As the second-most densely populated city in Ontario, Ottawa has a history of being the big city with a small-town feel. It’s this very reputation that draws young professionals, established families, and retirees to the Ottawa real estate market – a trend that the global pandemic has not been able to slow down (in fact, it’s only exacerbated activity).
Despite current world events, the real estate market in Ottawa, and across the province, is red hot with demand on the rise and inventory being low, leading to a seller’s market, with houses on the market for a fleeting period before being snatched up by buyers. With quick sales and skyrocketing prices in the Ottawa area, many prospective homebuyers are being pushed out of the market.
The Canadian Real Estate Association (CREA) projects the average home price in Canada to increase by 9.1% in 2021, meaning the time is now for those across the country looking to buy. For buyers seeking housing below the national average, the home prices in the Ottawa area are 10.7% lower, leading many people to stray away from the Greater Toronto Area (GTA) in favour of the nation’s capital.
The effects of COVID-19 have impacted the Ottawa real estate market significantly; namely, students and professionals working remotely. This has led many families to realize the need for more space, and therefore seek out areas like Ottawa due to the vast rural landscape surrounding the city centre.
The Appeal of Canada’s Capital
On paper, Ottawa is a heavily populated area (it is the second-largest city in Ontario) with more than 1 million residents, but the city is not as densely populated as others in the GTA or the Hamilton area. In 2016, Ottawa was ranked as the number 1 city to live in Canada by MoneySense Magazine. This is due to Ottawa being the hub of the public sector for jobs and diverse in terms of private sector opportunities, leading to high earning potential for residents. Coupled with moderately priced homes, Ottawa is favoured by many homebuyers over other big cities in the country, such as Toronto or Vancouver.
Pent-up Demand is Driving Ottawa’s Red Hot Real Estate Market
Over the course of the last 12 months, the Ottawa real estate market has surged in pricing and dwindled in supply. Ottawa Real Estate Board president Debra Wright says, “Even though our inventory is significantly lower than 2020 – a combined 46% decrease in housing stock for residential and condos – we witnessed a record number of sales in February 2021. How is that possible? Simply put, properties that come onto the market are selling very quickly.” The low stock has led to many homes being taken in a bidding war and being sold for much higher than the originally listed price.
This past February saw an impressive 1,390 residential properties sold across Ottawa, an increase of 23% over February 2020, and 26% higher than the previous five-year average. Not only are a record number of homes being sold each month, but the turn-around time from listing is steeply decreasing. Wright attributes the quick turnaround time to low supply. “With less than a month’s supply in both categories, residential homes, in particular, are experiencing the quickest turnarounds. This is evidenced in the sharp decline of days on market (DOM) from 30 days in February 2020 to 14 days last month.” On the contrary, days on market for condominiums has increased over the same period from 19 days to 22 days. This is attributed to the pandemic and people’s desire for more space as they work from home.
What is on the Horizon for the Ottawa Real Estate Market?
As the year progresses, it is projected that housing prices in Ottawa will continue to climb into the spring and summer of 2021. With Ottawa being home to many public servants, the median household income being more than $100,000 per year, and below national-average housing costs, residents are capable of adjusting to the price inflation in the real estate market.
The current low interest rate, in conjunction with an above national-average household income, indicates that many prospective buyers will be able to afford the home of their dreams – even with the steep increases in price over the last year.