July new home sales in Ottawa slid dramatically, but the drop is not as alarming as it may seem, says industry analyst Cheryl Rice.
New home sales reached 378, which is off more than 18.5 per cent compared to the 464 sold in July 2017, according to the Greater Ottawa Home Builders’ Association monthly new home report, which is compiled by PMA Brethour Realty Group.
But July 2017 “was an anomaly for new home sales in Ottawa and was attributed to the downturn in Toronto’s housing market,” says Rice, who is the Ottawa president of PMA. “A more realistic assessment is to compare July 2018 sales to the five-year average, which shows a four-per-cent increase.”
July new home sales were no exception to previous years, Rice adds in a release. “Sales slowed (compared to the month before), but still out-performed monthly and year-to-date five-year averages. Sites with inventory did extremely well, and high buyer demand consumed most of what remained at other projects.”
Down from June
Sales dropped 12 per cent from June, which saw 427 sales, but it’s common for activity to slow down over the summer before picking up again in the fall.
For the year to date, sales are 2,952, down 12 per cent compared to last year’s 3,363 — again, thanks to 2017 being an anomaly — but they are still above the five-year average.
Single-family homes led the market in July with a 51-per-cent share, followed by townhomes with 34 per cent. The shift in favour of singles is a reflection of a prolonged demand for townhomes leading to a shortage of supply. Typically, singles and townhomes run neck-and-neck for market share.
As an indication of the continued popularity of towns despite the drop in supply, the month’s leader in market share — Minto Communities — sold more towns than singles.
Who had a good month
Other top performers for the month included Mattamy, Tamarack, Richcraft, eQ and Claridge.
And in terms of where sales occurred, market share was more balanced than usual, with the south, west and east all hovering between 27 and 31 per cent market share and the east end proving to be the most popular, which is not usually the case.
According to PMA, the east end saw a 63-per-cent increase in market share this July over last. Townhome releases at Avalon Encore, where there were 29 sales, and the continued popularity of Caivan Communities’ Orléans Village were contributing factors to the strong east-end showing.
For August, Rice says builder sites across the city are reporting high traffic volumes, which “could translate into sales for many new home builders, with August numbers potentially matching July sales.”
And heading into the fall, she notes there are many new openings and product releases coming, “and with the demand for new homes remaining strong, we can expect a busy fall season with good sales performance.”
Resale sales up
On the resale front, numbers were up in July compared to the year before, says the Ottawa Real Estate Board.
There were 1,614 residential properties sold in July through the board’s Multiple Listing Service (MLS) System, compared with 1,524 in July 2017, for an increase of 5.9 per cent. That’s also above the five-year average for July of 1,501.
Much of the July increase is thanks to condo sales, which increased 14.3 per cent over last year versus a 3.6-per-cent rise for other homes.
“Ottawa’s condo market continues to positively impact overall residential sales trends with year-to-date condo unit sales up 16.5 per cent from this time last year,” board president Ralph Shaw says in a release.
Inventory levels improve
He also notes that inventory levels for both condos and other residential properties are improving, “which will help ease pressure on prices.” At the beginning of the year, available units were down 24 per cent from the year before. By July, the shortfall was 16 per cent.
The average sale price of a condo was $280,526 in July, up 5.3 per cent over July 2017, while for other homes the average price was $441,206, up five per cent over July 2017.
The board is also noticing a surge in sales in rural areas, especially in the west end, Shaw notes. “This is not only driven by availability but likely includes other attractive aspects in these well-established communities such as reasonable commute times, convenient shopping options, and great schools and recreational facilities.”
In terms of price point, almost half of condo sales fell between $175,000 and $274,999, while for other homes the most popular price range was $300,000 and $449,999, accounting for 45 per cent of sales. Still, almost one in five home sales fell in the $500,000 to $750,000 range, the board says.
“Ottawa’s healthy real estate market is a reflection of its strong economy, which is consistently firing on all four cylinders due to a secure employment base,” says Shaw. “It remains a competitive market, and multiple offers, when priced right, are still the norm in some neighbourhoods.”