Real Estate for the month of December

Well Hanukkah is upon us and Christmas is almost here. This is the first Christmas where I can smugly say I am ready! Bring it on! We are looking forward to having all of our family together to celebrate our good fortune and good health and enjoy just being with those we care about most.
This year has been a rather interesting one in the world of Ottawa Real Estate. We did not really experience the boom of a true spring market which usually begins after March Break and goes well into June. In previous years it has actually been strong throughout the summer but not this year.
In March we still had cold temperatures and snow on the ground and it felt like we went from winter straight into summer, albeit a summer as I recall that was rather intemperate, with lots of rain.
The interesting thing, however, was that there was much more activity this year in the higher end than we had seen on MLS in the last couple of years. For example, last year the highest MLS sale was $2,725,000 or thereabouts. We often would have at least 5 sales over $2,5M and at least 2 or 3 over $3M. We had not seen a $3M sale in almost 24 months and then in the spring we saw 2; one in Rockcliffe that was a home of newer construction that was on a larger than average lot. It sold for $3,125,000. The other was a spectacular waterfront property in Manotick that sold very quickly for $3,225.000. There was one very high sale this year for $7,775,000 in Rothwell Heights but this is somewhat of an anomaly in the Ottawa market.
Areas that usually generate million dollar plus sales such as Rideau Forest, Cedarhill, Rothwell Heights, Rural Kanata as well as Alta Vista and Rockcliffe Park, have been sluggish. It is not unusual for homes to be on the market in these regions over $1,000,000 for more than a year.
We did however, begin to see properties moving over $1,000,000 that had been on the market for some time. In those instances the price erosion is in the region of 20-25% and this is actually on par with what the Governor of the Bank of Canada has said. These numbers have been eroding for the last 20 months and I believe it is not a crash but rather a natural re-adjustment of a formerly climbing market. I clearly remember experiencing a 30 % price correction on a property in 1990 in Toronto but 7 years later that property almost doubled. All that to say that Real Estate. like many other industries, does experience ups and downs and if you are lucky enough to be able to perfectly time your exit than you are indeed fortunate. Most Sellers in the market are tied to moving for work, school, family or for health reasons and unfortunately these occasions cannot be timed so perfectly.
I have always taken the approach that the best client is a well informed client. That way as a client you are able to make sound decisions in real time. It is also important to have faith and trust in the expert you hire and it is best to take guidance from that person, otherwise you are wasting one another’s valuable time and money. Some Sellers take the view that they are not in a rush so they can afford to wait for the Buyer and ignore the advice of the realtor to adjust the price. This strategy however does work against selling. Having your property remain on the market with no reasonable price adjustment causes it to appear stale. When Buyers and other realtors have determined that the price is not in line with the market you will find there is no activity. Further, when there is no movement on the price, the outside world concludes that the Seller is not serious or not willing to negotiate. Hence, the property may be over looked. This is especially problematic when there is so much inventory available to buy. There is always another house. There is a saying in Real Estate; the longer the property is listed, the more the price is driven downward. If your property is not selling within a reasonable amount of time I believe it is the market telling you that the price is not where the market feels it should be. If you find you are not getting appointments despite all of the advertising and marketing, and calling this is usually a strong indicator that the list price is out of synch with the market.
There are a few points to consider when analyzing current market conditions. Lets take a look at them. Interest rates are still low but the Bank of Canada is looking for a window to raise them. They are still at remarkably low rates. So for Buyers this is a good condition. There is a large variety of inventory to select from out there at the moment. On the Ottawa Real Estate Board we have more inventory each month than in any of the previous 4 years in the same period. We see that prices in the upper end are beginning to fall so we should begin to see price adjustments in other price points as well as we move forward.
House prices in Ottawa have climbed only modestly so any adjustment that comes will be modest. This is in contrast to markets such as Toronto and Vancouver. You will recall that I have personal experience with the correction in Toronto in 1990. Real Estate does have cycles just like the stock market.
The condo market in Ottawa has been a rather painful experience of late for Sellers and a great opportunity for Buyers. Higher end condos have seen prices fall in the 20 – 25% range and many of the newest condos are not moving. Several planned projects for next year are on hold.
Another interesting factor announced today was that the rental vacancy rate is down, suggesting that Buyers are holding on for a little longer. This is not a bad thing as it gives Buyers more time to save for a larger and healthier down payment and avoiding a CMHC insured mortgage.
The oil market is a cause for concern in regions such as Calgary, Fort Francis, Edmonton, Newfoundland and Labrador. In Ontario we are now in a better position economically thanks in large part to a falling dollar and oil prices at 5 year lows. These two variables are a good omen for Ontario’s hurting manufacturing sector; so for Ontarians things are looking optimistic.
I believe all of this excitement and activity bodes well actually for us in the Ottawa Real Estate Market in 2015. If you are out to buy a home and your plans are to stay in your home for 5 – 7 years then all of this is just noise. Make your plans for 2015 and whatever they are, the team at ExceptionalProperties.ca is always available for advice, guidance and input to help you manage your Real Estate portfolio in the best way possible with the greatest results.
I want to take this time to wish you a very Happy Holiday Season. Merry Christmas to all and our thanks for all of the referrals and support you have sent our way. Happy New Year! May you have Health, Happiness and most of all Peace!