Ottawa resale home transactions fell nearly 30 per cent in August compared with the previous year – the sixth straight month of year-over-year declines as rising interest rates and soaring prices have combined to slam the brakes on steady sales growth seen earlier in the pandemic.
“The cost of housing, it’s just getting unsustainable,” Angela Augsbury, a broker at Coldwell Banker Rhodes & Company, told OBJ on Tuesday afternoon. “So I’m not surprised at all that the market has stalled.”
Members of the Ottawa Real Estate Board sold 1,137 residential properties in August, down 27 per cent from the 1,565 transactions in August 2021 and well below the five-year average of 1,603.
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Steep declines were evident across all inventory types, with sales of residential-class properties falling 27 per cent year-over-year and condo transactions plummeting 28 per cent.
Interest rate hikes have made a growing number of potential buyers think twice about jumping into the market, Augsbury said.
Even a jump of a quarter of a percentage point “can make or break (a purchase),” she explained, adding consumers are feeling the pinch of rising inflation that’s eating into disposable incomes and making it harder to save for a down payment on a home.
Fewer bidding wars
As sales have slowed, inventory has risen to nearly three months’ supply for residential-class properties, OREB said. That in turn has tamed the bidding wars that were common at the start of the year, causing homes to remain on the block longer and prices to stabilize – a marked contrast to the regular double-digit monthly increases earlier in the pandemic.
The average sale price for a residential-class property was $707,712 in August, a five per cent increase from a year earlier. The average condo changed hands for $421,966, up four per cent from August 2021.
“The lightning speed at which homes were selling at the start of 2022 is a thing of the past,” OREB president Penny Torontow said in a news release.
“The lightning speed at which homes were selling at the start of 2022 is a thing of the past.”
“Prices are still rising slightly in some areas, albeit lower single-digit percentage increases, bringing back the moderate price-growth stability that is characteristic of the Ottawa resale market. What happened to prices in 2020 and 2021 was unusual. We are moving towards a balanced market state, where buyers have choices and sellers need to ensure they are pricing their properties accurately.”
Augsbury agreed, noting that homes that were selling in the $1-million range at the market’s “ultimate peak” in January and February would likely now command closer to $850,000.
The veteran agent said once more homeowners realize that, asking prices will fall and the market will move closer to a state of equilibrium.
“If things are priced kind of where (sellers) are looking to get the prices they got, let’s say, in the early part of the spring, that’s not happening,” Augsbury said.
“I think once the sellers understand that they’re not going to get the $250,000 over (market rates) and they’re like, ‘Well, we’re just going to go with the market,’ I think this fall it’s going to stabilize. I think we’re going to go back to a very nice, balanced market.”
Augsbury said “core, old neighbourhoods” like the Glebe, Hintonburg and New Edinburgh tend to be seeing more robust resale activity than the suburbs right now.
But she said any property under $700,000 is still likely to get snapped up quickly – no matter where it’s located. She said her agency put a house on the market in Barrhaven for about half a million dollars last month and received more than a dozen offers.
“If something is priced well, I think it will sell immediately,” Augsbury said. “Once things are priced well, you’re going to see the market just go right back to being gangbusters. There are a lot of buyers looking.”