“Absolutely incredible” new home sales in 2017 to continue in 2018
Ottawa Construction News staff writer
Ottawa’s housing community enjoyed an “absolutely incredible year” in 2017 and things look equally positive for 2018, says Cheryl Rice, president of PMA Brethour Realty Group’s Ottawa division.
Speaking at The Greater Ottawa Home Builders’ Association (GOHBA) annual Sales and Marketing “Goodbye 2017, Hello 2018: Housing Market Outlook” breakfast on January 23, Rice outlined data indicating that the local market is the healthiest it has been since 2010 – and will continue that way even with new, tighter mortgage rules and somewhat higher interest rates.
She said last year, 5,560 new homes were sold in the Ottawa area, “19 per cent above the 10 year average, and the highest number of new home sales since 2010.”
The market didn’t reach the peak of almost 7,000 homes sold in 2007, before the global recession hit in 2008, but reflects a significant improvement from the years 2012-2016, when annual sales were well under 5,000.
The 702 sales in June broke the city’s monthly record, and while other months weren’t so exciting, the overall numbers still reflected a healthy market, Rice said.
The reason: In part, thousands of new government jobs have been created and Ottawa residents have confidence in their security and future. “Pent up demand was a significant factor,” she said.
As well, huge price increases in Toronto have caused purchasers to look at the Ottawa market’s relative affordability – a factor that means that even with the higher interest rates and new mortgage restrictions, the local market won’t be too severely affected by the changes, she said.
“All the whole, what was happening in Toronto was that sales were heating up very fast,” she said. “Toronto forced buyers to seek affordable housing elsewhere, including Ottawa. Toronto buyers were absolutely everywhere.”
Resale market developments also demonstrate the market’s healthiness. The market has shifted from a balanced market for resale homes to a seller’s market – while condos have shifted from a buyer’s market to a balanced market. The average resale price in 2017 was $425,063, an increase of 6.8 per cent from 2016 and 45.2 since 2007. Condo (one level) apartments meanwhile had an average resale price of $269,903, an increase of 3.4 per cent from 2016 and 36.1 per cent since 2007.
Overall, in 2017 the resale market commanded a 75 per cent market share while new home sales reached 25 per cent, an increase of three per cent from the previous year. Townhouses gained market share in the past year, increasing from 41 to 45 per cent, while single family homes still captured the largest market share at 39 per cent compared to 41 per cent in 2016. Condo apartments held steady at 14 per cent market share, while there was a decline from four per cent to two per cent for condo townhomes.
The last year saw a decline in market share in the eastern suburbs from 21 per cent to 18 per cent, with increases in the central area from 12 to 15 per cent of the overall market, while the south gained a percentage point to 38 per cent and the west declined a point to 29 per cent.
This year, Rice expects the good times will continue.
She doesn’t think that possible problems with the North American Free Trade Agreement (NAFTA) will impact the Ottawa market substantially. “Ottawa’s unemployment rate is 5.9 per cent, less than it has been in 10 years,” she said. “The Light Rail Transit project and others has construction booming.”
She said housing here continues to be affordable. “We have jobs, we have high consumer confidence, we see economic growth – all the fundamentals indicating a very resilient Ottawa new home market.”
“I think we can expect 2018 new home sales to match and possibly exceed the 2017 numbers,” Rice said.