Home sales in the capital rose six per cent last month from May 2022, the Ottawa Real Estate Board reported this week – and realtors say the bidding wars that raged during the market’s peak in late 2021 and early 2022 are back as a lack of supply continues to limit buyers’ options.
OREB members sold 1,939 residential properties in May, compared with 1,830 a year earlier. It marked the first time since February 2022 that sales volumes increased year-over-year.
The jump in transactions prompted OREB president Ken Dekker to suggest that prices, which have fallen after soaring to record highs early last year, could be back on the upswing soon.
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But he added that the situation could change if the Bank of Canada raises its benchrate rate on Wednesday.
“It is a promising year for sellers barring any interest rate adjustments, as we saw a correlated drop in sales every time there was an interest rate hike in 2022,” Dekker said in a statement.
“However, with only five to six weeks of inventory, we are in a strong seller’s market. With the pent-up high demand and sales volume increasing, we are likely to see upward pressure on prices as demand continues to outstrip supply.”
There were 2,822 new listings last month, down eight per cent from May 2022 and below the five-year average of 2,922. The average freehold house spent 23 days on the market in May, down from 27 days the previous month, while the average condo sold in 26 days, down from 33 days in April.
Dekker said that given the lack of inventory, “some neighbourhoods are again in multiple-offer territory.”
Veteran realtor David Sugarman echoed that assessment. He said his agency is seeing “more bidding wars starting to happen” as prospective buyers who’ve been sitting on the sidelines decide they can no longer wait to enter the market.
“Inventory is not really going to change … until we have more of a balance (with more new homes constructed),” said Sugarman, a sales representative at Coldwell Banker Rhodes and Co. “People are understanding that, ‘Well, we need a place to live and a house to buy.’”
Still, prices remained below last year’s levels as multiple interest rate hikes over the past 15 months have made mortgages more expensive.
The average price of a freehold home was $745,902 in May, down seven per cent from a year earlier. The average condo sold for $442,859 last month, a six per cent drop from May 2022.
But average prices increased slightly from April, and many real estate insiders believe the market could be poised to heat up again.
Dekker said that while the local industry is “not seeing steep price escalations yet,” homes are now selling for “well over” what buyers were paying at the end of 2022.
“With demand mounting in Ottawa’s chronically undersupplied market, I expect the average sale price will surpass last year’s figures … in the latter half of 2023 again – provided we do not see interest rate hikes,” he explained.
Sugarman said even if the central bank does raise its key rate on Wednesday, it likely won’t have an “impactful” effect on the market.
“Our economy is chugging along pretty well,” he said. “People need houses. People are just like, ‘Well, I guess we’ll just take these (mortgage) rates and we’ll take these (higher) payments … Maybe we won’t be able to get that trip in this year, but we’d rather have a house.’”
