Virtually all of Ottawa’s business sectors have been affected by the COVID-19 pandemic, and residential real estate is no exception. But prior to the restrictions introduced last month, the city’s housing market was in the midst of a profound boom that was reshaping the industry and will likely have long-lasting implications that will persist beyond this current period of uncertainty. Just before the measures limiting business activity were introduced, OBJ newsmagazine editor David Sali spoke to several local realtors to take the pulse of the industry. This article originally appeared in the March edition of the newsmagazine and includes updates on how COVID-19 is affecting the market.
As March fades into the rear view and forecasts start to emerge of COVID-19's economic impact, it’s easy to forget just how frenzied the capital’s real estate sector has been in recent months.
Reflecting on the feverish activity in Ottawa’s resale market, veteran real estate agent Jennifer Skuce points to a transaction she brokered last year in Mechanicsville.
The property on Stirling Avenue – in the heart of what not too many years ago was a working-class neighbourhood – had been stripped down to its studs, with no working furnace or even any electrical wiring.
“It was a bare shell, and it sold for $800,000,” says Skuce, a partner at downtown Ottawa’s Bytown Brokers. “That is ridiculous.”
According to the Ottawa Real Estate Board, the average value of a resale home in the capital rose by 8.4 per cent in 2019 to nearly $442,000. The figures for January were even more striking – the average residential property jumped a whopping 19.3 per cent year-over-year to $516,000, while condos fetched an average of $338,000, also up nearly 20 per cent.
In sought-after communities such as Manotick, Stittsville and Kanata, resale property values have rocketed up more than 40 per cent over the past five years.
"We’ve got a perfect storm right now."
“We’ve got a perfect storm right now,” explains Deb Burgoyne, the board’s new president and a sales representative at Royal LePage Team Realty. “I would tell you for the first time in my licensed life that all areas (of Ottawa) are hot.”
While migration has likely ground to a halt during the current crisis, Ottawa has turned into a highly attractive destination in recent years for skilled workers with relatively high incomes.
“The city itself has such tremendous potential that I believe is untapped,” says Ross Tavel, a sales representative at Keller Williams Integrity Realty. “We went through so many years where we really didn’t have much growth. The growth is finally here.”
New builds can’t keep up
According to the Canada Mortgage and Housing Corp., developers started work on about 7,800 housing units of all types last year, up only slightly from the two previous years. A lack of new inventory led to bidding wars for just about anything that goes on the resale market – and right now, that’s not a lot.
In a city with more than 400,000 dwellings, there were just 1,525 properties listed for sale at the end of December, compared with 2,075 the year before.
Condos were particularly scarce, with the available inventory falling more than 50 per cent to below 270 – about a one-month supply.
As a result, condos that sold in January spent just 31 days on the market, down from 73 days at the beginning of 2016.
“I’ve never seen that low inventory,” Burgoyne says. “We all hope it’s going to break. We all have our fingers crossed hoping that it’s going to get better.”
Rushforth feels the same way.
“How do you get into the Ottawa real estate market when the average price of a townhome is in the fours (in high-demand neighbourhoods)?” he says. “How does the first-time homebuyer afford that? It is concerning.”
COVID-19 might bring cooling effect
As hot as Ottawa’s housing market was heading into March, realtors in the capital are now left unsure of how the pandemic will affect home sales.
RBC said in a report Tuesday that it expects home sales to drop as much as 30 per cent across Canada as part of the economic fallout from the coronavirus pandemic, with prices expected to follow suit.
And then there are the operational challenges presented by a province in a state of emergency. Strict physical distancing restrictions have left realtors unable to provide the “personal touch” on sales, with many tours going virtual and open houses cancelled across the province.
David Sugarman, a longtime agent at Coldwell Banker Rhodes & Company, told OBJ last week that his phone has gone quiet as prospective homebuyers heed public health officials’ warnings to stay put if possible.
While other realtors echo his sentiments that the market will inevitably cool amid efforts to stem the spreading virus, Burgoyne reiterates that the Ottawa market, buoyed by relatively robust employment from the public sector, will endure any slowdown from COVID-19.
“Our market will recover,” she says. ‘I can’t tell you when; I can’t tell you if it will go back to the way it was. But I’m confident. We’ve always had a very resilient market.”
Realtors name their hottest neighbourhoods
OBJ asked local realtors to spotlight the city’s hottest up-and-coming neighbourhoods when it comes to residential real estate. Here are some of their top picks:
Jennifer Skuce, partner at Ottawa’s Bytown Brokers, says this part of town just south of Westboro and slightly west of the Glebe is gaining in popularity thanks to its proximity to the Glebe, its easy access to the Queensway and its relatively affordable prices. “It’s a sweet spot in Ottawa, as far as I’m concerned,” she says. “It’s become more of a destination. There’s a good selection of single homes, rows and a few other things.”
Fellow broker Deb Burgoyne is also a big fan of Carlington.
“It’s still a really bucolic neighbourhood,” she says, pointing to its well-manicured lawns and tree-lined streets and noting the area is still reasonably affordable. “It’s attainable and it’s central. People are willing to sort of perhaps scale down and take a smaller house in those (types of) neighbourhoods.”
Ross Tavel of Keller Williams Integrity Realty agrees, adding nearby Little Italy is really gaining steam as well.
“You’re so close to downtown, you have Dow’s Lake, you have the new hospital coming,” he explains. “That area is on fire.”
Tavel notes that while Vanier and nearby Overbrook have often been overlooked by many prospective homebuyers, the neighbourhoods just east of the Rideau River are starting to come into their own. “That area is so close to downtown. The price point is really low,” he says. “When a good home comes to the market and it’s priced properly, it sells very quickly in Vanier-Overbrook.”
Although these neighbourhoods certainly don’t qualify as hidden gems, veteran realtor Paul Rushforth says they just keep growing in popularity.
“When someone calls me and says, ‘Hey, I’m looking to find a townhouse in Barrhaven for four-hundred thousand (dollars), my response is, ‘Good luck,’” Rushforth says with a chuckle, adding the west end is thriving in large part due to the booming tech sector. “It’s almost impossible.”