Ottawa’s new-home market slowed again in November, continuing an easing off that began in October.
New-home sales were 411, down 1.7 per cent compared to November 2019, when there were 418 sales, according to the latest monthly report by PMA Brethour Realty Group prepared for the Greater Ottawa Home Builders’ Association. Sales in November were down 7.4 per cent from last month, when sales were 444.
“Supply, supply, supply. If there had been more homes available for sale in November, Ottawa new-home sales would have been higher,” says Cheryl Rice, PMA’s Ottawa president.
The inventory shortage we’ve seen for some time in the resale market is now being acutely felt in the new-home market. Of the 216 builder housing types listed in the November report, more than half of them (120) were either temporarily or permanently sold out.
“Pent-up demand following a long COVID spring lockdown resulted in a surge in sales throughout the summer, putting pressure on an already tight supply of new product,” Rice says.
For comparison, she notes that the January-to-November inventory in 2019 was 2,780, compared to an inventory of 1,457 for the same period this year, a drop of 48 per cent.
It’s “not a prudent strategy” for builders to ensure they have enough supply to meet demand or even exceed sales targets, Rice says. Rather, they need to sell a volume of homes that they can manage, from costs, to construction, to closing dates.
“The strategy for most builders in recent months has been to pace their sales by bringing ‘micro’ releases to market, some as small as a single block of townhomes. And while this has superficially cooled sales, many new-home buyers will have to wait until 2021 to purchase their new home.”
Opposite for resale
The new-home slowdown was in sharp contrast to the resale market, which saw a 26-per-cent jump over last November.
New-build townhomes continued in popularity, capturing 47 per cent of the new-home market share in November, and the south end really dominated with 58 per cent of sales. That was thanks in large part to releases by Mattamy Homes, including the launch of its latest project, Promenade, which opened with back-to-back, stacked and rear-lane townhomes, promptly selling all 52 lots released.
Mattamy’s strong month helped vault it back to the top of the market share list after an up-and-down performance for much of the year, while Minto Communities, which has had strong sales most of the year and often led the market share, slipped in November to third behind Claridge Homes and just barely ahead of Caivan Communities.