June’s Resale Market Rebounds

Here is a quick overview of the statistics for home sales in Ottawa in June 2020:

Number of Sales:

• 2,052 residential properties were sold, a decrease of 2 per cent compared to June 2019,
• of those properties, 1,622 were “residential” (non-condo) sales, up 1% from June 2019,
• the remainder, 430 were condominiums, down 12% from June 2019,
• the 5-year average for total number of June unit sales is 2072.

Video with Statistics:

in the last 6 minutes or so I share my opinions on the market

Commentary:

“With safety protocols firmly in place, and Buyers and Sellers more accustomed to our new normal, the resale market has rebounded to meet pent up demand,” states Ottawa Real Estate Board President Deborah Burgoyne. “While unit sales were down 55% in April and 44% in May, June’s sales results are within 2% of figures from this time last year”

“June’s new listings doubled compared to April and increased 45% from the number of listings that came onto the market in May. A consequence of these rapid sale turnarounds is that housing inventory does not have an opportunity to build. Residential inventory is now 52% lower than last year at this time, and condominium supply is down 42%. We continue to be in a strong Seller’s Market, with less than one month’s supply currently available.”

Average Sale Price:

• for Condo’s was $360,922, which is 17% higher than June 2019,
• for Residential non-condo’s was $575,623, a 15% increase over June 2019.

Multiple Offers & Seller’s Market:

“The manifestation of the Seller’s Market is certainly evident when you look at average property prices, which continued to increase, albeit less significantly, in the past couple months. We are once again witnessing double-digit percentage growth over last year, and the average residential price is now in the high five hundreds,” Burgoyne acknowledges. “Additionally, multiple offer situations are influencing market values as statistics show approximately 56% of properties sold over asking in June.”

Going Forward:

When asked what to expect from the resale market moving forward, Burgoyne speculates, “We are seeing what I call a reverse slope. The market understandably experienced a bit of a valley, and now it is moving up the other side. Usually, it’s the other way around, and by July we would start to see a slow down as Buyers and Sellers turn their attention to summer activities. I anticipate that along with our region’s exceptionally hot summer forecasted by the Farmers’ Alamanac, the Ottawa real estate market is likely to parallel that prediction.”

Dan’s Commentary:

Frankly, I was a not really surprised that the number of sales are now accelerating and that the majority of homes are selling over asking. I was a little surprised that we are currently close to the five year average for monthly sales. I didn’t think we would catch up so quickly on monthly sales numbers.

There are still a lot of home buyers and sellers on hold, waiting for the “right time”. For some they will wait until Ottawa real estate is fully open — once COVID has disappeared from the region. Despite those choosing to wait, there are a large amount of buyers that need homes and supply is still not able to catch up.

I find it concerning that 56% of homes are selling over asking. Are we in a housing bubble? On average, I don’t feel that most homes are listed “low to get multiple offers”…it is generally not common to do so in Ottawa. I am told it is common in other Ontario markets. So, when deciding on asking price for a home, the seller and their realtor are looking at comparable home sales, considering the current market demand, and pricing their home to hopefully sell in a reasonable timeframe. The home goes to market and then there are more than one buyers, and at least of those buyers believes the home is still worth more than asking. In the end, the market is correct for today’s supply and demand.

Remember to consider that there are still homes that don’t sell during the listing period. These homes would not count towards the denominator for home sales that sell over asking. It skews the stats somewhat. Additionally, there are homes that don’t sell, but then reduce their price and sell “over asking”.

In the video above I go deeper in to several of these topics.

I’m happy to discuss the market and your options when convenient.