Given the shortage of house listings and price momentum of the past couple of years, it was perhaps inevitable that Ottawa’s housing resale market would bust out.
It did so in June. While the benchmark price for single family homes jumped a robust nine per cent year over year to $466,300, the 10 frothiest districts — all west of Bank Street — saw gains ranging from 13 per cent to nearly 23 per cent, according to data published this week by the Ottawa Real Estate Board.
By the steady-as-you-go historical standards of Ottawa, this is strange new territory.
Here’s what’s behind it:
First, the declining inventory. The board said there were 3,048 residential listings at the end of June, down 23 per cent from a year earlier and off 33 per cent from June 2017. The number of condos available for resale has dropped even faster. Condo listings were a slim 826 in June, a decline of 41 per cent year over year, and down 50 per cent since June 2017.
All things being equal, dramatic declines in available properties on their own should boost prices significantly.
But in the west end there are also a couple of other price catalysts. One is the growing occupancy of the headquarters of the Department of National Defence at 60 Moodie Dr., which is prompting military and civilian employees to locate nearby, especially those who are moving into the region from other military bases.
Kanata’s high-tech industry has also become an increasingly strong magnet. In part, this is thanks to the remarkably strong performance of traditional anchors such as telecommunications specialists Ciena, Nokia and Ericsson, but it also reflects the rise of lesser-known firms such as Syntronic, ProntoForms, Cliniconex, Solink and Solace Systems. This is an industry sector newly invigorated by the rise of fifth-generation wireless technology and software-as-a-service.
Roughly 60 per cent of the city’s 50,000 high-tech employees work out of Kanata, up significantly from a decade ago — when the demise of Nortel Networks appeared to have dealt a body blow to the entire sector. Today, real estate developers are working on plans to add more than 10,000 housing units in and around Kanata, projects that will, if implemented, relieve some of the pressure on the commutes to and from the city.
Indeed, the number of new housing developments around Kanata may have helped to moderate price hikes for single family homes up for resale. The benchmark price for single family homes resold in June in Kanata was $481,700 — up 8.8 per cent year over year or roughly in line with the average for the city.
The biggest price hikes occurred in Britannia Heights (up 22.5 per cent to $560,600), Mooney’s Bay-Carleton Square (up 21.6 per cent to $616,400) and Britannia & Lincoln Heights (up 18 per cent to $519,500). Some caution is required here as the Canadian Real Estate Association, which calculates the benchmark data, appears to have revised part of the series starting two months ago. Even so, it’s clear that price gains have been significant throughout the western parts of the city.
The Ottawa Real Estate Board also provided a snapshot this week of how average house and condo prices moved in June. Residential properties in June sold for an average of $500,700 — up 11.4 per cent year over year, marking the first time that average prices topped half a million dollars. Despite the rapid rise, board president Dwight Delahunt insisted, “This is not a speculation market.” He noted that fewer than 40 per cent of properties sold above the asking price, mostly “well-priced and positioned properties”.
Even so, there’s no denying this is now a sellers’ market.
Condos also proved attractive, selling for $308,500 on average in June — up 6.2 per cent compared to June 2018. This was despite the heavy marketing of new condos throughout the downtown core.
Ottawa’s resale market for single family homes began busting out in June. Benchmark prices were up 9% to $466,300 yr over yr but the ten top districts, all in the west, were up 13% to 23%. High-tech, DND HQ and a listings shortage contributed — source: Ottawa Real Estate Board.