Ottawa real estate prices have been on an incline, but despite the growth, the city’s housing market ranked #6 of 16 Canadian cities when it comes to housing affordability, according to the 2020 RE/MAX Housing Affordability Report. While affordability is already one of the region’s biggest draws, cost-conscious home hunters in search of even better prices can find them in the communities of Vanier, Carlington and Beaconville South, which have been named the most affordable neighbourhoods to buy a home in Ottawa.
Factors contributing to Ottawa real estate prices
Ottawa real estate prices have been on the rise, experiencing an 11.7-per-cent increase from 2018 to 2019, and another six-per-cent increase expected this year (source: 2020 Housing Market Outlook Report). Despite the price growth, Ottawa remains one of Canada’s most-affordable housing markets, according to the new RE/MAX Housing Affordability Report.
In its inaugural Housing Affordability Report, RE/MAX examined 16 of Canada’s most-populous regions and ranked them on an affordability scale, with #1 being the most affordable and #16 being the least affordable. RE/MAX brokers were surveyed about average home sale prices and whether they believe real estate in their region is overvalued, undervalued, or right on the money. Ottawa real estate came in at #6 of 16 cities. Canada’s most affordable city to buy a home is Regina (#1) and the least affordable place to buy a home is Vancouver (#16).
RE/MAX’s affordability ranking was determined by assessing the percentage of a buyer’s monthly income needed to carry a mortgage, assuming a down payment of 25 per cent, and based on the forecasted 2020 average sale price per region and the forecasted 2019 average household income.
Unlike many regions across Canada, Ottawa is currently accurately valued, with a total average sale price of $441,693 in 2019. Condominiums and townhomes are the two favourite property types for first-time homebuyers, with the former typically listed at an affordable price range of $200,000 to $350,000.
To enhance housing affordability in Ottawa, there has been an increase in multi-generational home ownership, as well as financial support from parents for first-time homebuyers. First-time buyers in the Ottawa region are also facing difficulty entering the market due to the mortgage stress test and the residual effects it has on mortgage qualification.
At the high end of the affordability spectrum, the region’s least affordable neighbourhoods include Westboro, Rockliffe Park and Alta Vista.
Despite the commonly held notion that housing in Canada is unaffordable, the report finds that the vast majority of Canada’s largest urban centres (75 per cent) are currently undervalued, according to a survey of RE/MAX brokers in 16 of Canada’s most-populous cities.
In its report, RE/MAX explored the most popular property types sought by first-time homebuyers, the least and most affordable neighbourhoods in each of the 16 housing markets, factors preventing buyers from entering the market, and methods homebuyers are using to enhance the affordability of homes. Current and prospective Canadian homeowners were also surveyed about their sentiments around home ownership, barriers to owning a home, financial factors impacting home ownership, and what could potentially improve housing affordability.