Real estate has been a hot topic in 2017 for Ottawa, and we are seeing essential changes coming to the real estate market in 2018.

Here are some things to watch in Ottawa housing market in 2018:

Ottawa will attract more foreign and other city buyers

We are expecting an influx of foreign buyers in Ottawa market in 2018. In 2017, I have helped quite a few of my clients who were foreigners or relocating to purchase property here in Ottawa. The reason for it is mainly due to how the policy makers in Toronto and Vancouver have taken steps to curb foreign buyers by imposing a tax of  15% on them. Foreigners are now looking at other markets such as Ottawa since the capital is close to Toronto and Montreal, and prices are still reasonable compared to other major cities…
There is also an influx of people from Toronto who sell their properties there and plan to live here in Ottawa.

More data on home sales

In Toronto, there was a court ruling that would allow consumers public access to see sold prices of a property online. This has been a long dispute between Canada’s largest association of real estate brokers and a federal competition watchdog. This court order will directly impact the Toronto Real Estate Board but they also have till end of January to appeal the decision.

There is a small chance that this ruling may have impact on Ottawa market, but we real estate associates do so much more than determining a price for your home, our job is orchestrating a sale process from A to Z therefore  if you are planning to sell and want to have information of what has been sold recently in your area, please feel free to contact me and I will help to save you time and  money in today’s life and market conditions.

New Stress Test

As you may already know, there are changes in the mortgage market where the new rules aimed at making sure borrowers can pay off their mortgages if rates were to rise.

How does this affect you?

The guidelines has already taken effect since Jan. 1, 2018 and applies to new mortgages as well as mortgage renewal applications if borrowers switch lenders. Financial institutions won’t be obligated although they may choose to do so to apply the test at mortgage renewal for existing borrowers. The rules reduce the size of the mortgage Canadians will be able to take on given a certain down payment and income.

It basically boils down to the fact that it now requires federally regulated financial institutions to evaluate applicants for uninsured mortgages by using a minimum qualifying rate equal to the greater of the Bank of Canada’s five-year benchmark rate or their contractual rate plus 2 percentage points.

What this means is that if you fail the test, you might be eligible to buy something less expensive with a smaller mortgage. There are grandparenting periods where old rates and conditions (pre-approved prior to Jan 2018) might still apply, therefore, don’t hesitate to contact me for a trustworthy name of a mortgage broker.

Mortgage rates will go up

Mortgage rates are expected to rise in 2018, after seven years of historically low-interest rates, the Bank of Canada finally increased its overnight rate in 2017. It is expected that the rates will have a certain amount of rate volatility. Timing to get your mortgage will be the key since in spring and fall, lenders typically drop their mortgage rates to attract more customers. Thus consider shopping or renegotiating during spring and fall.

Condo purchase will be on the rise

One of the trends shaping 2017 has been that there was an increase of purchase in the condo market. OREB have said that condo sales are up by nearly a third over last year. There will be a more signs of condo sales. Property owners are starting to put their units back on the market for sale as their rental leases turn over and they made good use out of their investments over the years. I receive questions from people if this is a good time to buy an investment property. If you will keep the property for a long period of time and it has a good ROI, then why not?

With the effects of stress test, potential of higher rates and other life style changes, people will start looking at investing and living in condos.

Summary

Low unemployment rates; new, increased immigration planning by the federal government are important predictors of another strong year in Ottawa. I hope this gives you a oversight of what we expect in 2018. There are exciting and interesting times ahead and If you are planning to purchase or sell, feel free to get in touch with me, I will serve you with my expertise and confidence in the market.

Cheers!

Nilay Ertemur

References:
globalnews.ca/news/3807946/mortgage-rules-stress-test/
www.cbc.ca/news/business/real-estate-trends-1.4460775
www.zolo.ca/news/real-estate-market-trends-to-watch-for-in-2018
www.obj.ca/article/condo-market-recovery-buoys-ottawa-real-estate-market-july

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Forecasting 2015 Housing Market in Ottawa

As we all know predictions are not easy, especially for the future, but we can certainly go through some stats to find out how the market has been doing in the near past, to figure out how this year might turn out for Ottawa.

Mortgage and interest rate cut

Let’s look at the mortgage picture first, the average five-year mortgage rate in Canada is at a record-low 4.79%, according to central-bank data (Source: Financial Post ). Lower rates can be obtained from banks and other private lenders, such as Mortgage Brokers Ottawa, the mortgage rate on their site states 2.89 for a 5 year fixed (26 Jan 2015).
On 21 Jan 2015, Bank of Canada has lowered its interest rate to 0.75, it dropped the lending rate by a quarter of a percentage point. What that means is the cut will result in lower interest rates for variable rate mortgages, lines of credit and other loans that float with prime rates. They have called that fixed rates would be lowered also, and Royal Bank offered a five-year fixed rate of 2.84% on Jan. 24. (Source: Financial Post)

Prices of Houses and Comparisons

If we compare 2013 to 2014 market prices, we see some increases.

Month Average Home Sale Price Result
January 2014 $346,744 increase of 1.0% over January 2013
February 2014 $353,407 ncrease of 2.0% over February 2013
March 2014 $359,051 increase of 0.3% over March 2013
April 2014 $374,015 increase of 0.8% over April 2013
May 2014 $381,172 increase of 3.2% over May 2013

Ottawa is a healthy market that prices don’t go up and down like they do in some other Canadian cities, where there could be a very large influx of price ups and downs such as in Alberta… Prices of houses are still slowly going up here in Ottawa, with some minor adjustments in various neighbourhoods. 2014 was a year that average days on the market for a property increased significantly from the previous years and that was certainly not usual. Properties considered as luxurious in remote areas and the ones far from Ottawa core got hit first when it came to price reductions, however many city properties still held their value and on average saw a price increase by around 1 % in 2014.

And last but not least, this chart is key for us to understand what the economy has been doing in the near past and what the expected figures are for the coming years.

2012 2013 2014 2015 2016
Total Employment (000s) 697.6 687.4 696.5 706.0 715.5
% change 2.4 -1.5 1.3 1.4 1.3
Unemployment Rate 6.4 6.3 6.5 6.0 5.9
MLS® Res. Sales 17,184 16,539 16,472 16,750 17,400
% change 0.2 -3.8 -0.4 1.7 3.9
MLS® Res. Avg. Price 327,656 334,320 339,785 344,000 350,000
% change 2.4 2.0 1.6 1.2 1.7
Residential Permits (Units) 8,211 6,643 8,950 7,800 8,000
% change 2.7 -19.1 34.7 -12.8 2.6

Source (Ontario Chamber Commerce)

Conclusion

As we can see the prediction of 2015 would be business might proceed as usual, some adjustments are in effect but there are still increases in price for some areas in Ottawa. If you are planning for your new purchase or selling your existing house, or investment contact me and I will be able to provide you a FREE CMA (Comparative Market Analysis) report of your house value, or for the area you are looking for.

Here are some stats you can tweet:

ottawa2015

Ottawa 2015 prediction

Disclaimer: As this article has been published by the author, mortgage rates might have been changed again in the last couple of days, therefore it is recommended to talk to a mortgage broker about the latest rates and mortgage rules and regulations.

Sources:
Financial Post
CBC News

Author: Nilay Ertemur

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