Ottawa’s housing market recovery remains “wobbly,” as the May 2023 new-home sales report shows.
In its monthly report prepared for the Greater Ottawa Home Builders’ Association, industry analyst PMA Brethour Realty notes new-home sales were 332 in May, which is up 67 per cent compared to May 2022.
But May sales were down three per cent from April (343 sales) and, for the year to date, sales are barely 50 per cent of what they were in 2022 — a year that saw the new-home market plunge by April.
“There’s been nothing traditional about Ottawa’s housing industry for over three years, so it should come as no surprise that the market will be a bit wobbly during its recovery,” says PMA Ottawa president Cheryl Rice.
“A comparison between year-to-date sales for 2022 and 2023 is skewed by exceptionally strong sales in the early months of 2022 and very low sales volumes for the same period in 2023,” she says. However, she adds: “We expect sales for the remainder of this year to not only catch up with but surpass 2022 numbers.”
There was some unusual activity in the May market, heavily influenced by Minto Communities’ launch at the end of April of its Parkside at Arcadia enclave in Kanata. That launch proved to be very popular in a still-sluggish market, selling out of its initial release of 60 lots on opening day and recording a further 87 sales in May.
That activity pushed the west region into the top spot for market share for the first time since 2016 with a whopping 461 per cent increase in sales for the area over May 2022.
It also upset the balance of market share for product type. Where single-family homes and freehold townhomes typically jockey for the lion’s share of the market, in May, the usually tiny showing for condo towns rocketed from two per cent in 2022 to 32 per cent this year.
And it vaulted Minto into the top spot for market share by builder with a commanding 44 per cent share (it’s very unusual for a builder to capture more than 25 per cent of the market in any given month).
All of that is due to Minto’s offering at Parkside — back-to-back stacked condo towns that launched with a price point under $400,000, allowing buyers who had previously been priced out of the new-home market an opportunity to jump in.
Displacing singles
“Condo towns, which are always in demand, captured 32 per cent of total product sold in May, a significant increase from 2022 when this product type held a mere two per cent share due to very low supply,” Rice says. “Condo towns essentially displaced singles that saw sales decrease from a 48 per cent share in May 2022 to 22 per cent last month.”
Although the typical cyclical nature of home sales — strong spring and fall, slower winter and summer — has been disrupted in recent years, Rice expects new-home sales “will continue to be their strongest during the traditional buying seasons, probably with month-to-month fluctuations due to our market’s current volatility and unpredictability.
“And like any other year, sales will depend on the timing of new project openings and product releases, along with any external factors thrown our way.”
As for the Bank of Canada’s increase in the interest rate June 7, Rice says it’s “likely to have little to no impact on the demand for new housing, which had already adjusted following previous rate hikes.
“The bank’s move may, however, influence the type of housing consumers will buy, with more affordable product such as towns and condo towns as the product of choice.”
