Investors should take note—resale condominiums are driving Ottawa’s residential real estate market.
According to the Ottawa Real Estate Board (OREB), there were 2,105 June sales, up 2% over June 2018. Resale condos are, however, where the growth becomes noticeable.
“Increasing by 8.3%, condo resales are the driving force for the upturn in units sold in the first half of 2019,” Dwight Delahunt, president of the Ottawa Real Estate Board, said in a statement. “Combined residential and condo year-to-date sales of 9,876 show a 1.8% increase from June 2018.”
Over the last 10 years in Ottawa, condos have appreciated 34%, and as Delahunt notes, it isn’t a speculative market. Rather, economic fundamentals appear to be the main driver.
“This is not a speculation market. Going forward, we anticipate there will be high demand in the foreseeable future due to increasing population and strong employment in the area,” he said. "We’re pleased to see all levels of government starting to address the supply-side issue, but we feel there is still work to be done. We will be watching the upcoming federal election closely to gain insight as to how the various parties intend on addressing attainable homeownership issues.”
According to OREB statistics, 43% of all residential sales in Ottawa last month were between $350,000 and $499,999, but in the condo market the majority of sales (55%) were in the $225,000-349,000 range.
Chris Allard, a mortgage broker with Smart Debt Mortgages in Ottawa, has seen resale condos pick up steam and primarily attributes that to single-family detached and semi-detached houses becoming too expensive. Factor in strict mortgage qualification and condominiums become the obvious option.
“The prices of the detached homes and semis in the core increased in value quite dramatically, whether in The Glebe or Westboro,” said Allard. “Homes have increased in price, which means people originally looking for smaller homes either don’t qualify for them or they simply don’t want to pay that higher price. It’s brought them back to condos.”
Investors might also be wise to take advantage of the fact that there are very few new condos coming to market.
“The very few new-construction starts are priced higher and, therefore, all of the existing condos are priced higher,” he said. “What we’ve seen over the last two years is a lot of builders that were originally going to build condos have decided to build rental apartment buildings instead. Builders have five-year plans and a handful of years ago there was a slight decline in condo values because of too much inventory, so this is all a function of a flat condo market a few years ago.”
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate