A shortage of single-family homes is helping drive robust condo sales in Ottawa, according to the latest resale numbers from the Ottawa Real Estate Board.
The board reports that, in June, its members sold 2,070 residential properties through its Multiple Listing Service (MLS) System. That’s down from 2,163 in the same month last year but higher than the 5-year average of 1,914 units.
However, while sales of non-condo properties slipped 8 per cent compared to the same period last year, condo sales grew 11.5 per cent.
Inventory a critical factor
Condo sales in the first six months of 2018 are up almost 17 per cent compared to the same period last year. That’s boosted the resale market to the point where overall sales are almost identical to last year despite a continuing slide in non-condo property transactions.
Those healthy condo results are due mostly to the overall resale inventory situation, says board president Ralph Shaw. “The robust condo numbers are likely fueled by lack of inventory, particularly in the lower price points of the single-family resale market.”
For example, Shaw says the number of single-family units sold in the $275,000-$300,000 price range plummeted 41 per cent in the first half of the year, whereas condos at the same price point shot up 22 per cent.
“This suggests that at the lower end of the single-family resale market, buyers are turning towards condominium units as a way of achieving ownership at a price they can afford.”
Troublesome oversupply now a bonus
Ironically, the oversupply of condos that was a headache for the marketplace just a couple of years ago is now a good thing, helping slake the thirst for home ownership.
That thirst is aggravated by the difficulty first-time buyers have in acquiring a new home, according to Shaw. He points to increasing construction costs and the lack of skilled tradespeople as among factors driving up new home prices as well as extending the time it takes to actually build a home: two reasons people eager to get into the housing market are turning to the resale market, and especially condos, as their entry point.
He adds that another option is for buyers to look beyond the urban boundary for affordable homes in smaller, outlying communities.
Days on market down, prices up
The tight resale inventory means the days on market have dropped significantly in the first 6 months of 2018. Non-condo properties have slid from an average of 46 to 37 days, or 18 per cent, while condos have dropped even more, from 71 to 52, or 27 per cent.
The average sale price of a non-condominium property in June was $449,200, an increase of 3.4 per cent over last year. The average price for a condominium was $293,303, or 1.2 per cent more compared to the same month last year. For the year to date, non-condominium units have seen a 5.2-per-cent increase in average price while condominiums are up 1.1 per cent.