One thing is for certain; we should have seen this coming. Established in 1921, the Ottawa Real Estate Board celebrates its 100th anniversary this year, and what a year it’s been — record prices, record sales, record sales volume, record days on market, and record low mortgage rates.
Everyone wants to know, “Are home prices ever going to decrease? Should I wait to buy or sell? When will this crazy real estate market end?”
These are all valid questions, and a crystal ball might give some answers. Yet, if you look behind the record-breaking activity, there are some fundamentals at play that help explain where we are at and where we might be heading.
One size does not fit all
Real estate is regional, if not hyper-local. So, while economists can postulate their “bubble” and “speculation” theories about the Canadian housing market, the fact is, the Ottawa resale market has experienced a steady decline in housing stock for several years now.
The continual decrease in housing supply has led to scarcity, which has inevitably led to rapidly accelerated prices — demonstrating the economic principle of supply and demand.
With the first lockdown, there was a brief moment when the market seemed to stand still. Then real estate was deemed an essential service in Ontario. Realtors pivoted, retooled and began conducting open houses and showings often virtually rather than in person.
As if a bell rang and the gates slammed open, the market took off like a racehorse — and it has yet to slow down.
But it has also changed somewhat. Working from home led to buyer desires for more square footage, home offices and gyms. With commuting removed for many, the real estate market in outlying communities intensified. Since people couldn’t travel, the recreational property market also began to flourish.
The demand for condos dampened temporarily, but in February 2021 we saw an almost 20-per-cent increase in transactions over last February, so it seems clear the condominium market is not only stabilizing but rebounding.
We’ve never been here before
We live in a beautiful and dynamic city with a stable economy and strong employment rates. We’re one of the most affordable national capitals in the world, yet we’ve never seen this level of growth and appreciation of prices.
Action at all three levels of government is required to resolve our supply challenges. Ottawa must responsibly grow, diversify and intensify to create opportunities for first-time and move-up buyers, downsizers and renters — they’re all interconnected links in the housing chain.
Until that happens, the market will continue on this trajectory and go where buyers’ willingness to compete and pay for properties takes it.
How do you compete?
The value of a property is a moving target every day, so how can a buyer compete in multiple offers? Know your limit down to the penny.
Ensure you know your financial position, especially if you’re making an offer with no financing conditions. Don’t assume you can get a mortgage or afford a specific price range.
Be prepared to show proof of financial ability. This could help you win in a bidding war.
Submit your offer at the highest price you feel comfortable with. Don’t get caught up in the adrenaline rush, overextend yourself, and end up with buyer’s remorse.
Prepare to move at breakneck speed
Deposits should be liquid and accessible — you’ll need these funds within 24 hours.
Pre-inspections are highly recommended. You may end up doing this on multiple properties, but the one time you discover major structural damage will make it worthwhile.
Buying a condo? Have your lawyer on speed dial to review the status certificate.
Have reasonable expectations
Have a conversation with your Realtor so that you understand the possible consequences. Ask them about listing terms such as no conveyance, pre-emptive offers, etc.
Take the time to make it personal
Write a letter and tell the seller what you love about their home, include a fun family picture and share your employment details so they know you are financially sound. This may not put you ahead of a higher offer, but it’s an edge — especially if they are selling a cherished property.
DIY your renos, not your home purchase
Your home purchase is not a DIY project. In this complex and fast-paced market, it is crucial to utilize the experience of a Realtor with negotiation skills, market knowledge and offer submission strategies to act quickly on your behalf.