Happy New Year – Wishing 2014 will be a Great year for you with many positive experiences!
The 2013 Ottawa Real Estate Market in Review
2013 was an interesting year for Ottawa real estate. The first quarter of the year was slower than usual with pessimistic predictions from Economists, Government cut backs, changes in mortgage lending rules and even the weather. All factors that created uncertainty and caution amongst buyers.
Then spring came, flowers bloomed and so did the spring market with a record number of sales in the month of April. Sales continued at a normal pace in May and June then slowed down in the summer months. A summer slowdown is not uncommon, when the spring market ends and most families have already facilitated transactions and timed their closing for the summer months. Sales still occurred over the summer only at a slower pace than the year before.
September came and sales continued right into December. There were fewer sales than in 2012 for this period, but only marginally. “The total number of homes sold through the Board's MLS® system in 2013 was 13,873, compared with 14,326 in 2012, a decrease of 3.2 per cent.” Around early October a funny thing started to happen, remember those pessimistic economists? They were revising their past predictions to reflect the sales history of the past several months. I’m convinced after many years of attending seminars and reading words from the experts that they continually revise their predictions to always be right or at least never wrong.
The market did change in 2013 and yes, there was definitely a slowdown in the absorption rate of homes listed for sale. This in itself was a market cooling of sort as it dampened demand and the urgency to buy right away. This created a change in both Buyer and Seller behaviour. Sellers were more willing to negotiate on pricing while buyers were taking their time with buying decisions and even waiting for other properties to come on the market. Buyers were still buying, but it was evident that many were proceeding more cautiously and not prepared to pay the ‘future value prices’ that some sellers were initially expecting.
So what effect did all this have on the market?
In general, homes took longer to sell and prices were more in line with historic values. Sellers who were more motivated were selling their homes for slightly less than previous sales while Sellers less motivated were sitting on the market and/or expiring.
If there was a high inventory of similar properties in neighbourhoods or a type of specific property class (resale condominium apartments) there was a drop in value. Economics 101 never changes (supply and demand dictate value).
What’s ahead in 2014?
It’s 2014 and what does the future of the Ottawa real estate market look like? Here is where my opinion begins and I receive the most feedback from my clients. 2014 will start the year off strong with a balance number of sales and consumer confidence in real estate being very positive. Since the beginning of October last year there have been a lot of positive predictions from Economists (a change from their predictions in 2013) and this alone will impact the start of the 2014 market until the spring sales momentum takes over until the beginning of the summer months.
Should supply increase (more properties coming on the market) faster than the absorption rate of properties (percentage of these properties selling), then the market will only fall back to the same level as it was in 2013 - A slow start in the first quarter of the year until the spring market kicks in.
The difference once again is consumer confidence which is higher than it was at the start of 2013. Based on this, I believe 2014 will be a healthy real estate market, at least for the first 6 months of 2014.
Peter Sardelis, Broker