Oasis Realty Brokerage, Ottawa Real Estate
Gord McCormick Ottawa, ON K2S0H6
Phone: 613-435-4692 Mobile: 613-371-9691 Fax: 613-435-4698
 

Is buying Ottawa property to house a visiting student a good idea?


Over the years we have assisted many out of town buyers looking to purchase homes or condos to provide housing for their children who are coming to Ottawa to attend one of our large and growing post-secondary colleges or universities.

With limited on campus residences and cost factors in mind, many parents have bought apartments, townhomes or homes to accommodate student needs and also as an investment or cost offset.

Many have successfully bought and then sold several years later and either made some money or minimized the cost of accommodating the student during their years here in Ottawa. 

Once a “slam dunk”….
For most of the new millennium, this practice has been pretty positive, particularly for those who have rented out rooms to other students as well as their own children and those parents who have more than one child who will be living in Ottawa during the same period.

Now that we are in a period where prices have not been advancing at 5%-7+ annually, as they did during the 2000-2011 timeframe, this practice is no longer the “slam dunk” it was for many parents.  We recently completed a sale for an out of town family (now moving to Ottawa themselves) who bought in 2010 in a strong seller’s market and were able to sell this year but only appreciated a very small increase in the price of the property from what they had paid 5 years earlier.  While this was disappointing, these owners had kept the property well rented out to other students during the 5 years of ownership and therefore, still came out pretty well financially, despite the limited uptick in the value of the property.

Do you want your university age child to bear the burden of ownership and property management?
Some out of town parents may not wish to burden their children with the responsibilities of managing and maintaining the property; collecting rent, divvying up utility costs, being a disciplinarian and so forth, in addition to their school work and perhaps part time job.  Other parents may deem this a good “learning experience” and see it is as an opportunity.

Many factors to consider:
Those considering the purchase of such a property here in Ottawa should carefully research all financial factors in buying and selling in a remote city and the best source of information is a local Realtor who can assist with competitive issues, neighbourhood choice, property choice, local rules, buying and selling costs and so forth.  This practice is certainly no longer a “slam dunk” in our competitive buyer’s market and should not be undertaken too casually.

For more information or to discuss particular circumstances, feel free to give us a call if you are not already working with another Realtor.

Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692  oasisrealty@rogers.com

www.oasisrealtyottawa.com   

Visit our #2 in Ottawa ranked facebook real estate page: https://www.facebook.com/oasisrealtyottawa

Follow us on twitter: https://twitter.com/OasisrealtyOTT


Ottawa listing inventory highest in 12 years!


Many sellers face stressful summer in Ottawa real estate
June sales results were generally positive with increases in residential unit sales and average prices but listing inventory continues to grow and make life miserable for many sellers (especially condo sellers).  Unit sales and prices for residential properties are up slightly but condo unit sales are down 21% compared to last June and down 15.8% based on a 5 year average for year-to-date sales.

Residential sales are up about 4% year-to-date compared to both the 5 year and 10 year averages at the end of June.

Prices in both property categories are very modest on a year-to-date basis with the average residential property posting a 1.7% increase to $398,051 and the average condo price sold this year is $263,843 for an increase of .5%. 

Listing inventory may be the highest ever! Condos double 10 year average, residential +39.2%
We checked back as far as our available stats permit and our current inventory levels are the most for any month during the last 12 years.   Though our demand level is reasonable overall, there are just too many sellers in the marketplace.  Residential listings continue to increase and are 34.8% higher than the 5 year average and 39.2% higher than the 10 year average.  Condo listing inventory is 57.4% higher than the 5 year average and 100% higher than the 10 year average.

On the good news side, many of these sellers will also become buyers if their existing properties sell.

Who is having the most trouble selling?
There are a number of categories that suffer more than others in this type of buyer’s market, best to check with a Realtor to see how these circumstances might affect a particular property.  We’ll have a post on this later this week.  Condos, unique properties, non “move-in-ready” properties, higher priced listings, FSBO’s and those with excess improvements head the list of “toughest to sell” listings right now.

New home sales off about 20%:
New construction sales and starts are down about 20% this year, so builders are offering significant incentives for buyers to consider new construction.  This adds to the competitive choice for buyers but also makes even more competition for the resale listing, particularly for newer homes in areas where the builder is still building the same or similar models.

What to expect this summer/fall:
We expect to see continuing price adjustments by sellers who have now missed the peak spring market which should help keep residential unit sales in positive territory during the summer. Condos may be another matter altogether.

Get it sold by September!
Sellers with committed buying plans or other financial plans who have not had success in marketing their properties will certainly want to be aggressive in getting a deal done before the end of September when sales levels start the fall seasonal decline. (Summer sales levels are about 20-25% lower than spring and fall levels are 40-50% lower than spring)

Save $1,000’s on commissions and get it sold now!
We have some amazing commission saving programs and marketing plans to help ensure sellers get deals done this summer! If you are not already working with another Realtor and would like to discuss selling and/or buying options please give us a call 613-435-4692

* not intended to solicit those with existing representation agreements

Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
oasisrealty@rogers.com
oasisrealtyottawa.com 
613-435-4692


Summer is the best time to sell until next spring!


DON’T: “...wait until things pick up after Labour Day”:
One of the myths of Ottawa real estate is that summer is not a busy time for business.  “…school’s out…everyone goes on vacation or goes to the cottage” are familiar comments to explain the perceived summer business doldrums.  Nothing could be further from the truth!  Real buyers and sellers are still focused on real estate as a top priority.  For sellers summer represents the best chance to get their property sold and for buyers, they will have the best choice of listings until next spring.

Summer is the “Second Season”
Take a look at the table below which shows how important the summer season is to overall annual sales:

 

Month

2012

2013

2014

2015

 

Jan

682

602

589

627

 

Feb

1008

914

870

853

 

March

1388

1167

1189

1208

 

April

1568

1573

1420

1570

 

May

1890

1804

1792

1926

 

June

1662

1594

1661

1694

 

July

1376

1339

1445

        1436

 

August

1145

1219

1203

   

Sept

995

1119

1133

   

Oct

1021

1069

1121

   

Nov

928

891

893

   

Dec

615

610

640

   
           

80% of year’s sales done by end of September:
July sales levels are not typically achieved again until April and August sales are not superseded until next March, so now is the best time to get deals done.  We have a lot of listing inventory available for buyer choice and some motivated sellers.  Those selling, having missed the peak spring market are well advised to review their marketing and selling plans, particularly as regards pricing and presentation. 

Could mandatory home energy audits and a double land transfer tax be here for 2016?
See post below on the potential for two potential provincial government programs that could really dampen our real estate market.  Our market is steady but certainly not strong and we have far too much listing inventory.  Either of these two programs will make selling (and buying!) more costly and if both were to be implemented, we would see a few months of high demand while buyers and sellers tried to beat program implementation, followed by an extended period of slackened demand which could dramatically hurt an already fragile and price sensitive market.


Coming soon... mandatory energy audits and the MLTT?


Mandatory Energy audits and the MLTT: two good reasons to buy or sell now!
Buyers and sellers should be concerned with two pending agenda items on the Provincial Government review list:  the potential implementation of mandatory green energy audits and a Municipal Land Transfer Tax (MLTT).  If implemented, both of these items will add significant cost and complexity for buyers and sellers, possibly even prior to spring 2016.

Ten's of thousands of lost market value or green energy upgrade costs:
One portion of the disastrous Liberal Green Energy Act 2009 was shelved but is being revisited and would call for mandatory home energy audits prior to listing a property for sale.  While it is hard to disagree with the intent of the program, we feel that making the program mandatory is overkill and will cost Ontarians thousands and thousands of $$.

The cost of the audit itself would probably be fairly reasonable, between $350 and $500.  The real cost is in the updates necessary to score a better energy rating and the lost market value for homes with low energy scores.  Many seniors who have been in their homes for a long time could well be hit with big energy upgrade costs or a loss of their capital nest egg.

Upgrade costs would include costly windows, doors, electrical, lighting, heating/cooling systems, insulation and appliances and would run in to some major money. 

Sellers would have to get all this done prior to selling and would have no choice but to pass along the costs to buyers.   

Do you want to pay $5,700-$12,200-$20,200 in land transfer tax?
The MLTT has been in existence in Toronto for 7 or 8 years now and generates some $350-$400M annually in tax revenue.  While city officials in Ottawa have indicated they have no interest in implementing the MLTT here, it is clear that the Provincial Government is all about finding new “revenue tools” and Ottawa has some huge projects to finance (LRT and Ottawa River clean-up to name but two).  A large part of the funding for these projects is expected to come from the debt ridden treasury of the province.  So the money has to come from somewhere, either higher provincial income taxes, property taxes, special taxes like the MLTT or some combination thereof.

The city could be forced in to implementing a Toronto like MLTT in order to fund committed projects without drastically raising property taxes.

The MLTT would add the equivalent of the provincial land transfer tax to every purchase and increase the cost of buying a new home significantly.  The total land transfer tax burden on a future purchase would be as follows:
$300,000 purchase: $5,700 in provincial and municipal land transfer tax
$500,000 purchase: $10,475
$700,000 purchase: $20,200

So while nothing is for sure, never trust the shifting winds of politics and politically feasible methods of taxation. (especially with a debt ridden majority government!) Both of these measures could be in place by this time next year, so if you need another reason to be buying or selling this year…this might be it!


Recent Posts