Gord McCormick is the broker of record with Oasis Realty Brokerage and a senior member of the Ottawa Real Estate Board. Gord will be contributing a series of guest posts analyzing Ottawa’s real estate market.
Is it “déjà vu, all over again” in Ottawa Real Estate?
Short answer: Let’s certainly hope not!
We have suffered through another slow year in Ottawa real estate in 2014 with flat sales and overall prices barely in positive territory. A federal restraint program and a build-up of listing inventory have taken us in to a buyer’s market, where a supply/demand imbalance favours buyers. Let’s take a quick look back at the last couple of decades and see how our market has evolved over the last 25 years.
Outstanding Growth 2000-2010
We started the new millennium strongly for the first 11 years with average prices doubling from $157,511 in 2000 to $327,225 in 2010, an average increase of 9.8% annually. Unprecedented low mortgage rates during this period helped fuel a run up in prices and also helped cover some lost ground from the 1990s.
New Trajectory 2011-2014: Should we have seen this coming?
When you look at average price movement since the end of 2010, it definitely paints a picture of a new trajectory in market results:
Average price increase:
2011: + 5.2%
2012: + 2.3%
2013: + 1.6%
2014: + 1% or less (estimated)
We have certainly noticed slowing market conditions which really became apparent mid-2012. Ottawa’s current excess listing inventory did not happen overnight but has accumulated based on flat unit sales results over the last couple of years. This excess supply (plus new construction inventory from builders) resulted in competitive price pressures and lower average selling price increases.
Is it the 1990’s all over again?
The 1990’s were a dirty decade for Ottawa real estate. A recession plus a Liberal federal government that slashed jobs to balance the budget put a real chill on the Ottawa market for the whole decade. Average prices from 1990 to 1999 grew a total of only 5.8% (from $141,438 to $149,650) for an annual average increase of only 0.58%. In fact, the average selling price actually decreased in value during 1994, 1995 and 1996, something seen only five or six times in the history of the Ottawa Real Estate Board. Unit sales dropped by 31% from 1989 to 1995, before getting back to 1989 levels later in the decade.
Ottawa Board Membership mirrors results
As independent business people on 100% commission, the ranks of the Ottawa Real Estate Board (OREB) are closely aligned with the level of business and activity.
Board Membership by year:
2014: 3,025 (estimate)
Membership dropped 48% between 1989 and 1999. Since 1999, membership has grown approximately 226% to its current level. Growth has already levelled off and could be expected to plateau or even decrease if the current trend lines continue.
So how does this affect you and your housing plans?
We fully expect to see a continuation of these tougher real estate market conditions for the foreseeable future and this makes it all the more imperative for both buyers and sellers to be aligned with an experienced and qualified real estate professional.