It’s not news that the real estate market in Ottawa is really hot these days, even with the Covid-19 pandemic, and that people are often involved in bidding wars when buying a house.
Ottawa has been attracting many people lately. It is not for nothing that it was ranked among the top three of the best communities in Canada to live, for the third consecutive year by McLean’s Magazine.
To know more about the situation of the real estate market in Ottawa, I talked with Patricia Clarke, an experienced broker working with Right at Home Realty. She works in team with her husband Peter Clarke, an Ottawa native, and has more than 14 years working in Ontario. Recently she was nomined as an “Ottawa’s favourite Real Estate Agent” in Faces Magazine in 2020.
The real state market is experiencing big momentum in Ottawa, why is this happening?
Ottawa’s real estate market has been strong for many years but in the last two years prices have skyrocketed. There are many reasons. One is the price of properties. As other real estate markets are getting pricier and pricier, for example, cities in the Greater Toronto Area, people are starting to buy in cities like Ottawa.
Also, Ottawa has a good employment supply for many people. Here we have many government, high-tech and other industries jobs. More buyers are also buying because we have the lowest interest rates ever.
And in my personal experience, people that originally immigrated to Quebec are moving now to Ontario, and specifically Ottawa. They say prefer the Ontario’s education and health systems better and also because the income tax is lower here.
Do you think this could be a bubble or there’s solid base to think these prices are going to remain stable?
I don’t believe we have a bubble. Even in the middle of a pandemic, the housing market in Ottawa is hot. Houses are selling for tens of thousands over asking price due to bidding wars. Some, even for $100,000 and over.
We have been in a hot market for a long time in Ottawa. There are more buyers than sellers, and that increases prices and make buyers very anxious to compete for a property. Adding to that, the extremely lower mortgage rates are stimulating this real estate market.
I believe however that as more houses become available, and the rates come up, the market should balance.
Demand for houses exceeds the offer. Why is this happening?
This is called a Seller’s market and the reason for that is that there are more buyers than sellers. In other words, lots of people want to buy a house but the amount of properties available is not as big. There is a bigger demand than supply.
Is this a good momento to buy or to sell?
I would say both. It’s a great time to sell as we don’t know if the prices would be as good as today in the future. If you sell today, you are going to make a big profit. You just need to make sure that if you a pre-paying your mortgage before the term, you don’t pay excessive penalties.
But honestly, even paying penalties to banks, you will more than likely make
lots of money. This is not to say that every property could sell for lots of money. You need to fix it and present it well. That’s why we offer all our clients home staging (decor) included at no cost, so the property sells for more money and faster.
It’s also a great time to buy because the interest rates are extremely low. It’s not known how long the banks will be offering these kinds of rates.
The people who bought a property 5 years ago, and then sold it in the last year, how much profit did they make?
We need to have on account that every property (kind, size, finishes, age, lot size, etc.) and each neighbourhood has different pricing, but based on the historical average SOLD home prices in Ottawa (houses and condos) a person could have made a profit of in average almost 52% of profit for a house between 2015 and 2020.
We are obviously talking about a house located in a great neighbourhood, well
maintained and in great shape.
What kind of property is sold the most in Ottawa these days?
Based on our experience and statistics, most residential buyers are looking for a home between a $ 400,000 and $ 550,000 price, which basically are townhomes and small or older houses.
The condo market is even more competitive. Not only the prices of condominiums (apartments and townhouses) are lower, but more and more Baby Boomers are starting to downsize, sell their big houses and buy condos.
In June 2020 the average Freehold House Price in Ottawa was $632,075 and the
Average condominium price in Ottawa was $367,137.
Is downtown Ottawa still is the area most in demand? Which areas are expected to show the greatest upside?
Downtown Ottawa offers all kinds of properties and many young professionals,
diplomats and high-rank executives love living there. Also, many senior citizens love being close to everything so they live there.
Downtown Ottawa has many condominiums, high rise buildings and beautiful victorian and executive homes for example. There is a big demand for properties located in downtown and the prices are higher than ever.
However, as many more families are coming to Ottawa and our population keeps
growing, neighbourhoods such as Barrhaven, Kanata, Nepean and Orleans have great demand.
Everything depends on your needs and budget, but basically everything is selling well and projected to continue with high demand and appreciation.
Are there people who are not living in Ottawa that are buying houses here as an investment?
Yes, especially people coming from more expensive markets like GTA and Vancouver.
What would you recommend to people who are looking to buy a property in Ottawa?
With an inventory of homes so low and some sellers taking advantage of it, I
recommend to buyers to hire a great and reputable real estate agent.
Having an agent is free for the buyer. You just need to buy exclusively from that agent. That’s it. Your agent gets paid by the Seller’s brokerage and having your own agent doesn’t affect the price of the property. It works like that in an organized real estate market like the one in Ottawa.
As agents, we have access to all the properties available for sale in the market, even some that are not advertised publicly. Your agent would be also able to research prices of sold properties in the area and advise you in the best strategy to make the purchase a reality without overpaying.
The agent is also in charge of contracts, offers, etc.
In many countries, the concept of “Buyer’s agent” doesn’t exist so people think that going directly to the seller or the listing agent is good for them and they will save money but there is nothing further than reality. In many cases, people end up overpaying for their homes and giving many advantages to the seller without knowing. Believe me, I see it often.
I would also recommend buyers not to rely on the listing prices, as the sold prices are completely different. Some sellers underprice their homes to attract more buyers and create bidding wars, which increase sold prices substantially.
Also, before going shopping you MUST be pre-approved for a mortgage. Without that, would be almost impossible to know your real budget and compete with other buyers.
Your agent can help you with that too. And lastly, the worst thing a buyer can do is falling in love with properties that look great because they are “professionally decorated”. Why? because all the other buyers are going to fall in love with the same property because of their “pretty furniture and decor” and pay more just because the house looks pretty.
Those houses are the first ones that end up in bidding wars. If you want to make a good investment you need to be able to see further the appearances.
I always tell my buyers that the decor works like the filters on Facebook and Instagram. People may look amazing in posts but think about how do they would look without the filters and makeup?
It sounds funny but it’s the reality. Remember that as a home buyer, you are not buying the decor: You are buying the house, the neighbourhood, the lot, etc. The furniture and decor will be gone once you move. Be smart!
* The information provided here is Clarke’s personal view based on her personal and working experience.