Ontario Construction News staff writer
Ottawa’s housing market, both for new and resale homes, has thrived during the COVID-19 pandemic and the year ahead look promising as well, according to two speakers at the Greater Ottawa Home Builders’ Association (GOHBA) Hello Goodbye gathering last Wednesday (Jan. 26).
Robert Hogue, a senior economist with RBC, and Cheryl Rice, president of PMA Brethour Realty Group, shared their observations at the association’s annual look-ahead event, this year held online because of the pandemic.
Both speakers said after the initial pandemic shock and a short-term market crash in the early spring, the market has rebounded strongly – continuing a sellers market environment form 2019 – with inventory shortages and rising prices.
“The market is extremely tight, and this is true not only for our region, but also across most of Canada,” Hogue said. He said this is very unusual because typically housing market conditions are very local.”
COVID-19 caused a massive economic shock, he said. “The (government) policy response has been equally massive.”
Stimulus funding ensured the economy would rebound. “We saw a huge bounce-back in the summer (which) continued into the fall. Those programs and various actions from governments and the Bank of Canada ensure that we are on the track of recovery.”
Hogue believes there will be another slight economic dip this winter as the second wave of COVID restrictions slow things down, but the economy will grow again later this spring.
The economic impact hasn’t affected everyone equally, causing greatest burdens to lower income workers in the industries most affected by the pandemic, while higher-earners have managed to increase their savings.
“The Ottawa market had probably been one of the hottest if not the hottest markets in Canada in the past two years,” Hogue said, and this is continuing “with prices rising very rapidly now and at a pace somewhere between 15 and 20 per cent year-over-year, and very low inventories of homes for sale.”
Rice from PMA Brethour shared Hogue’s sentiments, adding some numbers and data to prove the point.
She observed that most job losses affected lower-income workers in the service sector who are renters, not owners. Conversely individuals who could afford a new home had the money to spend, and were looking for more space.
“We couldn’t go anywhere so we were saving money, and we were spending more time with family,” Price said. “The consumer was working with a nice set of criteria that created a shift in their housing wants and needs.”
Price said single family homes market share increased from 36 to 44 per cent in the past year, while condo apartments declined from 10 per cent to 7 per cent. Condo townhomes remained the same at 5 per cent, while freehold townhomes declined from 48 to 43 per cent – presumably reflecting consumers’ desire for extra room.
She said the average resale price for a new home in Ottawa in 2020 increased 20 per cent to $582,267 from $486,475 in 2019. The average for one-level condo apartments increased from $304,222 to $361,337, or 19 per cent.
Price said new home builders were increasing their prices throughout the year, as the resale market experienced a significant decline in available inventory (listings). The overall number of new homes sold declined to 5,928 during the pandemic from record sales of 6,315 in 2019 – but the number last year was still well above the 10-year average of 4,730.
Much of the growth occurred in the city’s new southern suburbs, reflecting 44 per cent of the market (compared to 42 per cent in 2019), while the western areas stayed steady at 27 per cent, the east increased from 19 per cent to 22 per cent and central area demand declined to 7 per cent from 12 per cent.
Price said she expects that the Work from Home (WFA) phenomenon will continue, and is reflected in shifting buyer preferences to more space, ground-oriented housing and “buyers looking to the suburban exurbs and beyond.”
There will continue to be migration from more expensive cities (such as Toronto and Montreal) and, once the pandemic is resolved, immigration will resume – with the government targeting a goal of 400,000 immigrants nationally in each of the next three years.
“Already our new home market is very busy with several new releases in January,” Price said. We’ve seen this information coming in and it reinforces the expectation that new homes sales performance in 2021 will match, and possibly be stronger than last year.”