2023 14-2 April Real Estate

Ottawa is a safe market for real estate

By Nancy O’Dea

What a difference a year makes! There’s no need to panic. If anything, it feels like we are moving back into what appears to be closer to a normal market.

Traditionally, the real-estate market moves on a continual basis and typically begins to come alive after March Break in mid to late March. In the two previous years there was a fever pitch of activity with people trading real estate quickly and for unprecedented prices that began on January 1 and sailed through until the end of May 2022. Thereafter the market almost came to a standstill.

I have said in the past that Ottawa real estate has been seriously undervalued for many years given that it is a capital city of a G7 country. Although prices have softened from the soaring numbers of the heated two previous years, they have not crashed. They have begun to stabilize with modest adjustments ranging on average about 12% from the previous erratic days of multiple offers.

On the diplomatic front there is a war being waged in the Ukraine. The inflation we are currently experiencing gives rise to prices increasing domestically, especially with entertainment, groceries and fuel affecting everyone. We can also see that rents are climbing as people are shifting from a position of purchase to a more cautious position of renting.

Is that a sign for opportunities to become a real estate investor and a landlord? Perhaps. Income properties, however, because of inflation, are on the rise with lower than usual capitalization rates.

Looking at the world we see that there is evidence of fragility in some banking systems in various sectors globally.  However, the Canadian banking system is still ranked as strong with many checks and balances in place yielding a AAA rating.

With balanced market conditions and more listings beginning to appear, Ottawa is a safe real-estate market in which to invest.

Bond rates are inversely proportional to interest rates so monitoring the bond market for those watching interest rates will reveal where interest rates may be going.

The word “temperance” comes to mind, and I believe many are giving financial decisions the sober second thought they deserve.

In reviewing the first quarter of the year regarding real estate sales in Lowertown we can see that although the sales in both the condominium sector and the residential sector appear to be down from 2022 and 2021, they are more in line with where we were in pre-pandemic days in 2019.

In the year to date from January 1 there have been 20 condominium sales in the neighbourhood compared to 47 sales in the previous year. In the residential class in 2022 there were seven sales in contrast to just one since January this year.

Reviewing inventory levels in the neighbourhood there are at this time 32 active listings with three conditional sales and eight active listings in the residential class.

When comparing sales activity to the same period in 2019 (pre-pandemic) from January to March 27th there were 21 condo sales and 3 residential sales suggesting that we are aligned with pre-pandemic numbers. Current inventory levels are close to balance, creating conditions that are fair for both buyers and sellers.

With balanced market conditions and more listings beginning to appear, Ottawa is a safe real-estate market in which to invest with time being on the side of buyers, enabling them to make thoughtful financial decisions for their families and their investments.

Nancy O’Dea is a sales representative on the O’Dea team at Engel & Völkers Ottawa Central, Brokerage.