We’re always hearing how much the average house price in Ottawa has increased year over year, and people often ask me how that relates to the value of their own property.
The short answer is: not too much. More importantly, focusing too much on average increases may cause you to leave money on the table.
Why? Because while some people may believe they live in an average house in an average neighbourhood, there is really no such thing.
Ottawa’s pricing history
Ottawa has typically been one of the most stable real estate markets in the country. Prices here usually don’t rise to the excitement (or panic) levels of Vancouver or Toronto, but the past year or so in Ottawa has seen an extremely hot seller’s market.
Lack of listings and high demand have caused prices to increase greatly in the last couple of years and particularly in the past six months, at least until the COVID-19 pandemic. Some areas have seen price increases of up to 10 per cent in the last six months alone.
We used to say Ottawa enjoyed an average annual price increase of 4.5 to five per cent. That was the case for about 60 years, but then price growth dropped significantly from 2012 to 2016. With the sharp increases more recently, one might think the Ottawa market is now overpriced, but those higher prices have simply balanced out the earlier lower prices so that overall we’re still averaging a 4.5 to five per cent growth over the past 70 years.
The current pricing situation
The past year has been ripe with multiple offers on most any property that went on the market within an appropriate price range. Selling prices initially averaged three to five per cent over asking, with that increasing to around seven to eight per cent over the asking price in the last two months. Remember, that’s average over the asking price — there were many that were much more than that!
With the current restrictions on mobility and in-person showings due to the pandemic shutdown, the real estate market has slowed significantly since the middle of March. Homes are less likely to have multiple offers, and when they do the number of offers is significantly smaller than it was pre-pandemic. It seems people are behaving themselves and staying home for the most part.
However, prices have not really dropped, and I expect once people can be out and about our hot market will continue for quite a while. There is a lot of pent-up demand from several good factors:
- many people couldn’t buy a home last year due to competing offers and are still looking;
- Ottawa salaries are high and stable compared to most Canadian cities;
- Ottawa is one of the fastest growing cities; and
- our inventory is even lower than last year.
Pricing strategy
People often think that when the market is seeing a scenario of multiple offers, you can list anything at any price and sell it. But having the right price is still absolutely critical to getting the most value out of your property. You don’t want to leave five or 10 per cent on the table.
And that means knowing what every comparable property has gone for, including the selling price and the percentage over the asking price that properties in that area are getting. Especially now that we are locked down and isolating and multiple offers may not be the norm, it’s more crucial that your home is priced correctly so that you still get the best value.
The bottom line is that you want to have a professional do the research for you, especially on pricing, and ensure that your home is marketed well to generate the most interest. That is key to getting the most money in your pocket.
