Continuing low inventory took its toll on the resale market in February, according to the Ottawa Real Estate Board (OREB). The situation could also be a harbinger of more challenging times ahead for buyers, said the board.
OREB members sold 979 residential properties in February through the Board’s Multiple Listing Service (MLS) System. While that is higher than the five-year average of 922, it is down 2.3 per cent from the same month in 2017, when members sold 1,002 properties. The decline reflects a tightening supply evident in 2017 and a further decline last month.
Looming supply issue?
There is buyer demand for both condos and other properties and sales in February would have been higher had inventory been more plentiful, OREB president Ralph Shaw said in a statement.
“This is creating a supply-side issue in the Ottawa real estate market … If this trend continues, the market will move to favour sellers, and buyers will find themselves competing for a limited number of listings.”
The shortfall in the resale homes inventory is compounded by a similar shortage in the new home market, Shaw said, especially after that market enjoyed a brisk year in 2017. He said the new home market is being hindered by the lack of land because of the urban boundary and escalating land prices.
Prices up & condos driving the market
The average sale price of a non-condo property sold in February in the Ottawa area was $429,600, an increase of 2.7 per cent over February 2017. Condos averaged $273,174, an increase of 5.6 per cent over the same month last year.
Condos are driving the number of properties sold at the moment, the board reported, and the condo market is experiencing some price recovery because of demand. The limited availability of rental units in the area is likely behind the brisk sales of lower-priced condos. “The lack of availability is essentially forcing renters into condo ownership,” said Shaw.
Possible problems ahead
Shaw worries that Ottawa may be starting to experience some of the factors that have led to difficult real estate markets in larger Canadian cities.
“It starts with supply shortages, which eventually lead to affordability issues,” he said. “The city in particular needs to have an intelligent vision about how to support and stimulate all aspects of the market from new construction through to the rental market availability.”
Related
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