What a difference a year makes. At this time last year, new-home sales in Ottawa were soaring as we emerged from the first pandemic lockdown. Fast-forward a year and the July 2021 new-home market has tumbled, reaching barely half of what it would normally be.
That’s according to the monthly report prepared by industry analyst PMA Brethour Realty Group for the Greater Ottawa Home Builders’ Association.
July new-home sales hit a lowly 225, down 66 per cent from July 2020, which saw 670 sales, and 49 per cent lower than the five-year average of 445 sales.
“The decrease in new-home sales can in part be attributed to the traditional seasonal slowdown, but what really kept buyers away was the lifting of COVID restrictions,” says Cheryl Rice, PMA’s Ottawa president. “People who saved money during the COVID lockdowns have had cash to spend on travel, vacations, family trips and outings — the proverbial spending spree — only it’s not new homes that they’re buying.”
2020’s ‘steep upward trajectory’
To put the comparison between last year and this year in perspective, she says, “this time last year Ottawa sales were on a steep upward trajectory post-COVID lockdown, with new and fierce pent-up demand fueling new home sales. This heightened level of sales activity was sustained through the remainder of 2020 and into the first quarter of 2021 and made for a strong market come-back.”
But now we’re starting to see consumer pushback on new-home prices, she says. “Townhomes at an average price of $700,000 are not being sold at the same quick pace as earlier this year, leaving unsold product on the shelf. At current townhome prices, it’s not a big leap for some buyers who originally considered a townhome to instead purchase a small single-family home.”
That’s reflected in the market share of home types sold in July. Typically, townhome and single-family home market shares are fairly balanced, hovering between 40 and 45 per cent each. But this July the balance was weighted heavily in favour of singles, with 59 per cent of the market, versus 28 per cent for townhomes.
Rice sees builders responding to softer demand through fewer and smaller price increases. “The market is self-correcting and heading towards a balanced market, which is good for everyone.”