By Michael McWilliams
Going over the most recent real estate statistics can be confusing. For example, according to the Ottawa Real Estate Board, January home sales were about 16.5% higher than in January 2023. Yet, sales were 10.7% below the five-year average and 3.9% below the 10-year average for the month of January. Inventory levels are about .5% lower than the 10-year average. February 2024 sales in Ottawa were 15.2% higher than last February. Inventory levels are higher year over year as active listings are up 16.3%. All these numbers and still I have a hard time giving people a clear answer about how I see the market performing this coming year!
One interesting statistic to think about is the average price of a home in the Ottawa area over the years. In the last year, home prices have fallen from a high of roughly $750,000 in mid-2022 to about $640,000 today. Yet the average price is still way up from $355,000 only ten years ago. Prices generally stayed under $400,000 until mid-2017 when they increased continuously until the onset of the COVID pandemic in early 2020. Then there was a two-year buying frenzy and the home prices increased dramatically.
What do we make of this information? As a real estate agent, I think of buyers who are faced with higher interest rates that make the cost of borrowing more expensive, housing prices that are very high, low inventory levels that leave people with much less choice in their housing options, and the list goes on. I think of sellers who worry that the value of their homes has dropped significantly or even that there may not be any buyers. I think of the first-time buyers – it’s already difficult enough to save for a down payment and now they have to contend with higher mortgage costs, as well. I think of the people who are considering “downsizing,” those who would like to sell their home of many years and buy another property for less money to have some money left over for a rainy day.
Of course, each case is slightly different and so we have to consider the different factors that are unique to each person. Everyone has unique requirements when looking at making a move. Generally, interest rates will only affect people who have to borrow money. It may appear that there are fewer buyers, but there are still buyers in the market. Perhaps we have to look at different neighbourhoods to get the type of home we had dreamed about. Whatever the case may be, there is likely a solution. One thing is clear, however – we all have to manage and perhaps even alter our expectations in light of the changing real estate landscape.
That right there is why I struggle with all the statistics! If I were to consider interest rates only, I might think nobody can afford to buy a home. If I think about how low the inventory levels are or how many home sales there were last month, or the month before or last summer, I might worry about the future. Statistics only show parts of the story. Indeed, we could each look at the same statistics and come to very different conclusions. One thing is certain: there are still buyers and there are still sellers and so I believe that there is still a healthy real estate market.
Michael McWilliams is a sales representative with Engel & Volkers Ottawa Central