Over the past couple of years, the real estate market has been the subject of intense discussions and media coverage due to skyrocketing prices. However, things are now shifting towards a more balanced and normalized market. Ottawa realtor and founder of Bennett Property Shop Realty, Marnie Bennett, agrees that these changes are a result of higher interest rates.
In the past, record-breaking sales have been fueled by extremely low interest rates, but with rates on the rise, buyers are facing a loss in purchasing power. For every one percent increase in rates, buyers lose ten percent of their buying power. While these changes may seem significant, it's essential to remember that the real estate world is always in flux.
The Toronto Perspective
Toronto, being Canada's largest real estate market, offers us an overall view of the current state of affairs. Year-over-year sales in Toronto have decreased by an astonishing 41 percent. Additionally, home prices have seen a decline of nine percent compared to March 2022, with the GTA experiencing a decrease of approximately seven to eight percent.
While these statistics might cause concern, it's crucial to analyze whether these changes are merely a temporary trend or a broader aberration.
Ottawa's Unique Situation
Ottawa provides a different perspective on the evolving real estate landscape. The average sales price for residential homes in Ottawa has increased by 11 percent compared to the previous year, with the average home price in March 2022 being $743,309. Condominium apartment prices have also risen by 11 percent year-over-year, with prices in March 2022 reaching $426,874.
When we examine specific Ottawa neighborhoods, we observe some interesting trends. Areas like New Edinburgh, Alta Vista, and Greely have seen price increases ranging from 33 to 63.5 percent. These figures indicate that certain neighborhoods are still highly sought after, despite the overall market changes.
What's Driving These Changes?
As we delve deeper into the reasons behind the shifting real estate landscape, Bennett provides us with some valuable insights:
- Inflation has reached a record high of 6 percent, making it the highest in the past 30 years.
- In early 2020, the Bank of Canada reduced interest rates to almost zero to mitigate the economic impact of the pandemic.
- Low interest rates have propelled home prices up by more than 60 percent over the past two years, with millennials and investors making up a significant portion of the market.
These factors, combined with the severe shortage of homes in Canada, have led to a complex and ever-evolving real estate landscape.
Bennett assures us that despite these changes, it is still considered a seller's market in Ottawa. With just over a month's supply of inventory available, there are fewer qualified buyers and fewer multiple offers. However, well-maintained and updated homes are still able to command prices above asking.
As we navigate this changing real estate landscape, it's important to remember that adaptation is key. The market is slowly shifting towards a more normal and balanced state. By staying informed and working with experienced realtors like Marnie Bennett, both buyers and sellers can make the most of these evolving times.
