The market recovery remains slow, but it is recovering, as the March 2023 new-home sales numbers show.
In the latest report prepared by PMA Brethour Realty Group on behalf of the Greater Ottawa Home Builders’ Association, there were 195 new-home sales in March, which is down 62 per cent from the 514 homes sold in March 2022.
For the year to date, there have been 477 new-home sales, down 73 per cent compared to last year, when there were 1,767 sales.
But that gap in sales is slightly smaller than it was when comparing February this year versus February last year.
“March new-home sales at 195 are certainly going in the right direction,” says Cheryl Rice, PMA’s Ottawa president. “Although 2023 monthly and year-to-date sales fall short of last year’s numbers, the market correction is unfolding as expected.”
Spring upswing?
And there are signs of increased interest in the market, which typically sees an uptick in spring. Sales in March were up 20 per cent from February, when there were 162 sales. It was a similar showing in the resale market, which saw a 40 per cent jump from the month before.
“Both resale and new-home markets are seeing more typical spring activity, but many buyers will continue to be sidelined due to high interest rates and increased cost of living,” Rice notes. “That the Bank of Canada is holding its current rate is good news for the consumer, whose confidence in the housing market will continue to grow over time.”
In an announcement this week, the Bank of Canada held its benchmark interest rate at 4.5 per cent. Predictions are that while we might continue to see small interest rate increases this year, the big jumps seen last year, which put the chill on the market, are done.
“For those who can afford to purchase a new home, higher mortgage costs have severely shifted the income qualifying levels, reducing the home size and expectations of buyers,” says Rice. “The demand for smaller, lower-priced homes from first-time buyers and investors will likely remain elevated for as long as the rates remain high.”
Townhomes popular
The continued dominance of townhomes over single-family homes is evidence of this trend. Townhomes claimed 65 per cent of the market share in March, the fifth month in a row in which they’ve captured well over 50 per cent of the market. In a more stable market environment, townhomes and singles will typically have a balanced share of sales.
The sluggish market also has builders hedging their bets when it comes to launching new projects, which are starting to stack up. Several builders had hoped to launch last year but are still holding off. Recent exceptions are Ironwood by Cardel Homes, which launched in March, and Shea Village by Patten Homes, which launched in February. And Minto Communities has announced its latest project, Parkside at Arcadia, will launch at the end of April.
“While many new project openings slated for 2022 have been paused or delayed, builders are releasing new phases of existing projects,” says Rice. “Some builders have had significant price decreases and are offering more attractive design centre bonuses, while others have not.
“Buyers are advised to shop around as builder offers may be restricted to specific product for a limited period of time.”
