The 2018 Ottawa Real Estate Market - A Year-In-Review

Another record-breaking year for the Ottawa real estate market. How did it happen? Here are three important reasons that explain the market's strong performance in 2018: 

1. A Strong Condo Market

• The condo market experienced a 13.1 per cent increase in the total number of condo units sold (4.058) compared to 3,587 units sold in 2017.

• The reasons for the strong condo market were: 
  • Affordable prices which benefitted for first-time home buyers who value the importance of home ownership rather than paying higher rental apartment costs.  For example, most of the buyers purchased condos in the $175,000 - $275,000 price range and in the $300,000 - $350,000 price range, which accounted for 61% of the condo market.
  • Shortage of condo units available for sale in the market combined with high buyer demand. For example, the average number of days it took for condos to be sold in the market went from 68 days in 2017 to 52 days in 2018. This trend shows condo units were sold immediately after being listed in the market for a few days. 
  • It is important to keep in mind that the average number of days for condos in the market does not reflect which specific types of condo units sold faster than other types of condo units. This statistic is to provide you with an idea about the selling trends of condos throughout the Ottawa area in 2018. Therefore, it is best to speak to a realtor to find out which specific types of condos were sold frequently in specific neighbourhoods.
  • Low vacancy rates for rental apartments combined with a limited supply of rental building inventory.
  • High sale prices of residential homes, which increased on average by 5% at around $447,000. This is the result of low inventory of homes for sale combined with high buyer demand, which resulted in lower residential home sales.

• Most condo buyers purchased:
  • 2-storey units - average price - $239,519 (previously $229,797 in 2017)
  • One-level condo units - average price - $304,216 (previously $298,537 in 2017)

•  Condo units were purchased mostly in: 
  • Nepean and Kanata - average price - $238,072 (previously $221,974 in 2017)
  • Downtown Core Ottawa - average price - $319,631 (previously $310,130 in 2017)
  • Orleans - average price - $221,615 (previously $217,345 in 2017)  

 2. Growth in the Luxury Residential Home Market

• The luxury residential home market was another housing sector that performing strongly in 2018. According to the Ottawa Real Estate Board, 2,860 homes in the $500,000 - $750,000 price range in this market were sold, which was a 20.2 per cent increase compared to 2017.

• These properties accounted for 21.3% of residential home sales, which is the most homes sold in that price range than any other price range in the residential market.

• Most of the luxury homes were purchased in the western and eastern sections of the city:
  • West-end - average price - $520,127 (previously $550,788 in 2017)
  • East-end - average price - $532,394 (previously $486,888 in 2017)   

3. Positive Economic Growth

• Apart from its housing affordability, Ottawa continues to attract more people from other provinces and foreign countries due to growing high-paying job opportunities in the federal government and high-tech sector. For example, approximately 9,000 additional high-tech vacant jobs need to be filled by the end of 2019 due to technology companies expanding or moving into the Ottawa market. In fact, according to Real Estate Intelligence Network (REIN), Expert Market, a tech-hub analysis company highlighted Ottawa as the number one technology hub in Canada due to its relatively low cost of living compared to other major Canadian urban centres.

• Other factors contributing to Ottawa's economic growth are the:  
  • Median household income in Ottawa, which is over $104,000 and climbing and is the highest median income in Ontario, which far exceeds Toronto and the provincial and national averages.
  • Unemployment rate in Ottawa at 7 per cent, which is among one of the lowest rates on average than in Canada overall and Ontario.

• With the federal government and high-tech sector continuously hiring overtime, Ottawa's population has grown to 5.8 per cent from 2011 to 2016 and continues to climb which has placed pressure on the supply of rental homes, resale homes and new homes.

• Ottawa's employment, income and population growth are reducing rental vacancies resulting in higher rents and increasing home purchase demand.

• Infrastructure and transportation development are significantly contributing to Ottawa’s economic growth. Development projects such as LeBreton Flats, the new Light-Rail Transit project and its planned expansion, and the redevelopment of the Rideau Carleton Raceway Casino not only will provide new home construction and purpose-built rental housing opportunities, it will also provide opportunities for investors to purchase existing rental properties that have positive cash-flow potential near those development projects.  
  • According to REIN’s Ottawa transportation study, it concluded that properties, located within about 800-900 metres of a Light Rail Train station, would generate higher rental demand, higher value appreciation of 10-20% and higher rental income within 2 years of the station opening. Therefore, it is important for investors to do their research and due-diligence in finding rental properties in specific neighbourhoods, where the LRT stations are located, that offer long-term tenants who value convenient living, positive cash-flow and opportunities to fix and flip existing properties to generate immediate profits.

Ottawa is Ranked Number One For Real Estate Investing!

Based on the positive economic fundamentals, consistent population growth, unique demographic trends, community/neighbourhood revitalization projects, and modernizing existing infrastructure and transportation systems, REIN ranked Ottawa as the number one place to invest in real estate. If you are an investor with a long-term mindset looking to grow your financial portfolio or to improve your personal finances, Ottawa is a great opportunity to invest and build consistent, long-term wealth.  

In Looking Ahead in 2019

• The Ottawa housing market will continue to experience increasing buyer demand and low inventory of homes available for sale in the market. These trends will increase home sale prices. If you are looking to buy an affordable home, the best options are looking for opportunities in the suburbs and rural communities of Ottawa, if you are willing to commute. For example, Orleans, Limoges, Barrhaven, Metcalfe, Richmond, Carleton Place, Carp and Arnprior are some places to consider.

• It is expected that more first-time homebuyers and retirees will purchase condos due to its affordability compared to residential homes.

• In the luxury market, there will be an emerging trend where eager buyers will purchase and tear down older homes and convert them into new home developments. This is happening in the neighbourhoods of Westboro, Hintonburg, Mechanicsville, New Edinburgh, Centretown, Glebe, Old Ottawa South, Vanier and Overbrook, just to name a few.