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Ottawa residential prices jump sharply despite COVID-19 fears

Fewer listings in Ottawa in May translated into higher prices despite the presence of COVID-19
Fewer listings in Ottawa in May translated into higher prices despite the presence of COVID-19

It’s actually rather astonishing that Ottawa’s real estate agents sold 1,066 residential properties in May, along with 279 condominiums. While that’s little more than half the total number of units sold during May 2019, it’s still a lot of sales activity considering we’re in the midst of a pandemic.

The accompanying surge in prices has been even more remarkable, according to data published Wednesday by the Ottawa Real Estate Board. The average price for condos resold in May was $343,600 — up 15.5 per cent year over year — while residential properties gained 11.2 per cent over the same period to $548,140. These increases were sharply higher than the marginal, year-over-year gains posted in May in Toronto and Vancouver, and contrasted with declining prices in Edmonton.

Indeed, average residential house prices in Ottawa last month were just two per cent below the all-time peak reached in February.

Part of what we’re seeing is the continuing momentum of a residential real estate boom that arrived late in Ottawa — markets in Toronto and Vancouver peaked years earlier. In Ottawa, the sector was soaring just as the coronavirus prompted Ontario and the federal government to shut down large swaths of the economy. Many house hunters in Ottawa were left frustrated by their inability to nail down a purchase.

It didn’t help that fears of catching the virus prompted potential sellers suddenly to stay put, drastically reducing the number of available properties.  At the end of May just 1,933 residences and condos were listed for sale in Ottawa — down 50 per cent from a year earlier, representing less than one per cent of the city’s total housing stock.

The result is bidding wars are still common. The fact that prices increased so strongly also suggests there are many households confident in their longer-term economic prospects. Certainly most of those employed by the federal government and high-tech industry — combined, nearly 30 per cent of the city’s workforce — are so far in this category.

Confidence among buyers with secure jobs also appeared to grow from April to May, when the number of residential resales jumped 55 per cent.

Similar patterns could be seen in the country’s other major cities. In greater Toronto the number of properties sold through the multiple listing service jumped 53 per cent in May compared with April, when the fear of COVID-19 infections was near a peak.

In greater Edmonton real estate agents sold 54 per cent more properties than they did in April.

In Vancouver, the bounce from April to May was slightly less pronounced at 34 per cent.

Nevertheless, these one-month gains in sales volume need to be interpreted carefully. For one thing, the resale market is extremely seasonal — and May happens traditionally to be the most active month. It’s more illuminating to look at things year over year, when the number of sales in May slumped 54 per cent in Toronto, and by more than 40 per cent in Vancouver, Edmonton and Ottawa.

Prices have generally held up, though not to the same extent as in Ottawa. The average year-over-year gain in Toronto was three per cent to $863,600, ranging from nine per cent for semi-detached homes in the 416 area code, to two per cent  for detached houses in the 905 area code ($863,600 average). In Vancouver, the benchmark price — a shade above $1 million —  was up three per cent year over year. Edmonton witnessed a four-per-cent drop in the average price year over year to $354,000.

Drilling into the 50 or so real estate districts that comprise greater Ottawa reveals some interesting patterns:

  • The sharpest declines in real estate activity last month occurred in wealthier and more popular districts. For instance there was just one residential sale in Westboro – High Park (for $910,000) compared with 15 sales in May 2019. Sales activity collapsed more than 60 per cent year over year in districts that included New Edinburgh, Dow’s Lake, Tunney’s Pasture and Riverside.
  • Four real estate districts recorded average residential prices of more than $1 million.  Rockcliffe Park, until recently the only member of this club, saw house prices average $2.1 million in May while transactions in Mooney’s Bay, the Glebe and Dow’s Lake all averaged a shade above $1 million.
  • Three of the four most-active districts are in the west: Kanata (with 100 units sold in May, down from 202 a year earlier), Barrhaven (95 units, compared with 168) and Stittsville (61 units, down from 118) — reflecting high-tech hiring and the presence of the new defence headquarters on the former Nortel campus. Orléans-Cumberland real estate agents recorded 83 sales in May, a reduction from 113 a year earlier.  Collectively the four districts account for one in three of all sales.

Copyright Postmedia Network Inc., 2020

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