GUEST POST: Frigid February freezes Ottawa real estate

No surprise that it was tough sledding in Ottawa real estate in February.  Record setting cold during the month may have deterred some casual buyers but underlying market weakness and an imbalance of supply and demand continue to be the dominant influences of the current market. ** Unit sales down, prices flat ** Monthly unit sales were mostly flat compared to equally dull results recorded in February 2014.  Based on 5 year averages, residential sales during the month were down 6% and condo sales a whopping 30%. The average condo selling price increased slightly during the month, while the average residential selling price was flat with a slight decrease of .3%.  Year to date average prices are flat for both residential and condo properties. ** Will spring sales melt listing inventory and bring a flood of sales? ** Listing inventory continues to grow well beyond expected accumulation in advance of the busy spring sales season.  Residential listing inventory at the end of February was 9% higher than last year and 31.8% higher than the 5 year average.  Condo inventory was 5% higher than last year and 58.2% higher than the 5 year average.  This clearly says there are more sellers in the market than buyers and this represents about 2,000 excess listings currently available right now and with 3 of heaviest listing months ahead of us.  If sales do not increase significantly, we can expect our buyer’s market conditions to continue with significant pressure on selling prices for most properties. ** Higher end listing inventory most challenged ** A quick synopsis of current listing inventory levels compared to 2014 sales suggests that we are overweight on listings $500K+.  For example: during 2014 sales of properties $750K+ accounted for only 3.1% of all residential sales yet currently account for 7.3% of listing inventory.  If one adds the $500-$750K category, sales above $500K in 2014 totalled 14.7% of all sales yet current inventory has 21.7% of total listings.  So those listing properties above $500K will want to be very careful with their list pricing, marketing and timing strategies. We expect to see this category of properties to also take longer to sell. ** Outlook ** We are hoping that there may be some Federal Government budget thaw and pre-election goodies which would help our market.  Some reports suggest that there may be an uptick in DND personnel moves which is a very important factor in our spring/summer market here. Ultra low mortgage rates may also move some buyers off the sidelines and in to the market.