Ottawa home sales rose year-over-year in January, but the market remains “relatively quiet” as would-be buyers continue to take a wait-and-see approach, the Ottawa Real Estate Board says.
OREB members sold 629 units last month, up 16.5 per cent from January 2023, OREB said in its latest housing market report.
But sales were still 10.7 per cent below the five-year average and 3.9 per cent below the 10-year average for January.
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“Ottawa’s market activity is seeing positive gains over last year, but it’s still a relatively quiet market even by pre-pandemic standards,” OREB president Curtis Fillier said in a news release.
Fillier said that while local real estate agents are seeing an uptick in showing activity, “it’s not all translating into sales.”
“This tells us that buyers are back out there looking, but still approaching cautiously,” he added. “During the pandemic market, buyers had to move quickly and sometimes settle for a property that didn’t check all their boxes. Today, buyers are using the slower market to take the time needed to find their perfect place.”
The price of an average home also rose year-over-year, increasing 1.8 per cent to $631,722.
The benchmark price for single-family homes rose 3.7 per cent to $703,500, while townhouse and row units saw their benchmark price fall 2.1 per cent to $462,200.
Ottawa mirrored other major Canadian housing markets that have shown signs of a rebound to start the year.
In the Greater Toronto Area, the Toronto Regional Real Estate Board said home sales soared 37 per cent in January compared with the same month a year ago.
Other local real estate boards have also reported year-over-year increases in home sales activity last month: Vancouver sales jumped by 38.5 per cent, while in Calgary they rose by 37.7 per cent and in Montreal by 18 per cent.
“Clearly, the mood in the market is starting to improve,” said Benjamin Tal, deputy chief economist at CIBC Capital Markets.
“The market is starting to internalize that interest rates have peaked.”
Tal said the main outstanding question is whether sellers will respond to renewed demand. If the housing market sees improvement in the number of new listings, this would prevent prices from rising too quickly over the next six months.
But TRREB chief market analyst Jason Mercer predicted that once the Bank of Canada starts cutting its key rate from the current five per cent level, likely in the second half of 2024, more competition between buyers amid constrained supply will push prices higher.
The number of new listings in Ottawa has been increasing recently. There were 1,271 new residential listings in January, up 7.3 per cent compared with the same month a year ago and 17.5 per cent above the five-year average.
But Brandon Reay, OREB’s policy and external relations manager, said Ottawa’s housing supply remains “chronically low.”
The organization is calling for policy changes aimed at boosting inventory, including streamlining the zoning appeal process at the Ontario Land Tribunal, eliminating exclusionary zoning and permitting four units on residential lots.
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Reay said governments also need to invest more in colleges and trade schools that train construction workers in order to help address a persistent shortage of skilled labour.
“Ottawa needs more suitable and affordable homes to address the housing crisis, and we need to increase density to meet population demands,” he added.
“We don’t need any more reactionary and distracting policy, like the federal government’s extension of the foreign buyers ban.”
Meanwhile, the Bank of Canada has expressed caution about the potential effect on the housing market should it move too quickly to lower its policy rate.
In a summary of governing council deliberations that led to December’s decision to hold the rate steady, members said easing financial conditions prematurely could prompt a rebound for Canada’s housing market, further fuelling inflationary pressures.
“The Bank of Canada is of course paying attention to demand-supply conditions, but at this point we’re not in a territory … where the market might start to be a bit heated and therefore generating price increases that could be problematic for the bank,” said RBC assistant chief economist Robert Hogue.
“I don’t think what we’re seeing right now is necessarily a red flag for the bank to start to change its signals for the market.”
Hogue said activity levels will likely remain status quo until the forecasted mid-year rate cut, which he said will need to happen in order “for this kind of emerging recovery to be sustained.”
“The broader recovery, in our view, is more going to unfold over the second half of this year,” he said.
– With additional reporting from the Canadian Press
