By Michael Arthur
Ottawa’s Residential Resale Market Performs Well During COVID-19 Crisis
Surprisingly, the Ottawa residential resale market was resilient during the unprecedented COVID-19 pandemic that started in early March with stable sales and a continued increase in the average sale price, which went up 16.5% at $559,739 from 467,382 during the same month in 2019.
Here is what happened in March:
Stable Residential Resale Housing Sales
- Despite the COVID-19 pandemic, the residential resale market was able to withstand its impact with a slight increase in sales in March with 1,170 houses sold, an increase of 3.3 per cent, compared to 1,133 properties sold in March 2019.
- Residential homes again sold quickly on average from 48 days to 35 days on the market, which is about a 26.2 per cent decrease.
- Buyers bought residential homes in the $400,000 and $550,000 price range, which accounted for 54 per cent of the residential home sales.
- Buyers bought mostly:
- Two-storey homes – average sale price – $577,795 (previously $492,985 in March 2019)
- Bungalows (1-story) – average sale price – $528,820 (previously $466,404 in March 2019)
- Most of the residential homes were bought in:
- Downtown Ottawa – average sale price – $713,556 (previously $615,268 in March 2019)
- Kanata/Nepean – average sale price – $579,991 (previously $475,478 in March 2019)
- Orleans – average sale price – $542,680 (previously $459,641 in March 2019)
New Residential Resale Listings Were Stable
- The number of new residential resale listings in the market during the pandemic decreased slightly to 1,579 properties from 1,672 new properties listed in March 2019, a 5.6 per cent decrease. This is a significant improvement compared to January and February which had significant reductions in new listings by 10.1 and 20.8, respectively.
A Decline in Condo Sales
- The condo market generated 355 units sold compared to 374 units sold in March 2019, a 5.1 per cent decrease.
- Condo units continued to sell more quickly on average from 46 days to 23 days on the market, which is a 49.3 per cent decrease.
- Buyers bought most of the condo units priced in the $250,000 – $400,000 price range, accounting for 58.6 per cent of the condo market.
- The most sold condo units were:
- Two-storey homes – average sale price – $321,435 (previously $255,218 in March 2019)
- One-level homes – average sale price – $366,334 (previously $309,274 in March 2019)
- Most of the condos bought were in:
- Downtown Ottawa – average sale price – $417,185 (previously $317,419 in March 2019)
Decreased New Condo Listings
- The number of new condo listings in the market decreased to 469 properties from 535 new properties listed in March 2019, a 12.3 per cent decrease.
Impacts of COVID-19 on Ottawa’s Housing Market
The unprecedented arrival of the COVID-19 pandemic in early March has caused some impacts to Ottawa’s housing market:
- During the period from March 17 to April 1st 2020, in comparison to the same time period in 2019, there were 1,240 new listings taken compared to 1,317 new listings taken in 2019, a 6.2 per cent decrease. In terms of sales, 793 properties were sold along with 224 conditionally sold properties for a total of 1,017 from March 17 to April 1st 2020, compared to 947 sales during the same period in 2019, a 7.4 per cent increase. For rentals, 100 properties were rented in 2020 compared to 133 rentals made in 2019, a 33 per cent decrease.
- Physical showings of properties for sale to buyers have been significantly reduced due to the Government of Ontario’s state of the emergency announcement on March 17, and the mandatory physical and social distancing measures imposed on realtors by the Ottawa Real Estate Board. As such, realtors are offering virtual showings of properties to buyers through 3D-virtual tours and live video recordings through mobile applications such as Facetime, WhatsApp Video, Zoom, just to name a few.
- Real estate transactions are experiencing longer closing periods, usually 45-60 days, due to banks and mortgage lenders having concerns about property values decreasing and borrowers defaulting on their mortgages due to loss of income resulting from job layoffs from the pandemic. As such, they have implemented strict lending policies requiring buyers to provide more detailed documentation to minimize their financial risks. This has caused logistical challenges for buyers and sellers who have already made previous plans selling their homes and buying new homes with tighter closing dates.
- In the rental market, due to significant job losses from the pandemic, tenants are experiencing financial challenges paying their rent while landlords are experiencing challenges receiving rental payments making it difficult to pay their mortgages and other expenses of their rental properties. As such, many landlords are offering rental deferral payments or instalment payment arrangements to make it reasonable and affordable tenants to pay the rent.
Some Practical Solutions To Survive the COVID-19 CrisisIt is recommended during this period of uncertainty to take action on the following strategies based on your current situation: 1. Review your budget and find opportunities to reduce your expenses on things you do not need and will not help you. This will help you find and build up your cash reserves just in case of a potential or long-term job layoff, job loss and/or unforeseen expenses. 2. If necessary, use your home equity line of credit or unsecured line of credit to help you pay down your credit card bills and other expenses. Interest rates on lines of credit follow the Bank of Canada key interest rate when it changes, and are much lower than interest rates on your credit cards which are least 20% and above. 3. If you own a home, talk to your mortgage broker or bank to find out how much equity you have in your home. Depending on your personal situation, if you have a lot of equity in your home, you can:
- use it for refinancing to get a lower mortgage rate and use it for some savings, to pay down your debt and to pay your expenses, or
- sell your home if you need to downsize to another home that is cheaper based on your current financial and personal circumstances.
4. Another important point is to NOT PANIC. Take a deep breath. Look at your finances and numbers. Talk to your team of professionals (i.e. financial planner/advisor, lawyer, accountant, realtor, mortgage broker etc.) for their expertise and advice to help you make a well-informed decision. People make bad decisions on their emotions rather than using logic. Don’t fall into this trap and become a victim.
STAY FOCUSED! STAY SAFE! STAY HEALTHY!
Michael Arthur is a realtor with Avenue North Realty who helps people upgrade their lifestyle and wealth through real estate. He works with first-time homebuyers, rent-to-own tenant buyers, business owners, real estate investors and people going through life transitions, such as personal bankruptcy, retirement, separation and divorce. Through the Helping Hand Program, Michael helps his clients save money on their closing costs when they buy and sell their properties. If you need help with your real estate needs, Michael can be contacted at (613) 890-7653 or firstname.lastname@example.org.