Is it the 1990's all over again in Ottawa real estate?
Is it “déjà vu, all over again” in Ottawa Real Estate?
We have suffered through another slow year in Ottawa real
estate in 2014 with flat sales and overall prices barely in positive territory. A Federal restraint program and a buildup of
listing inventory have taken us in to a buyer’s market.(supply/demand imbalance
favours buyers) Let’s take a quick look
back at the last couple of decades and see how our market has evolved over the
last 25 years.
Outstanding Growth 2000-2010:
We started the new millennium strong for the first 11 years
with average prices doubling from $157,511 in 2000 to $327,225 in 2010 an
average increase of 9.8% annually.
Unprecedented low mortgage rates during this period helped fuel a run up
in prices and also helped cover some lost ground from the 1990’s.
New Trajectory 2011-2014:
Should we have seen this coming?
When one looks at average price movement since the end of
2010, it definitely paints a picture of a new trajectory in market results.
Average price increase:
2011: + 5.2%
2012: + 2.3%
2013: + 1.6%
2014: + 1% or less (estimated)
We have certainly noticed and reported on slowing market
conditions which really became apparent mid-2012. Our current excess listing inventory did not
happen overnight but has accumulated based on flat unit sales results over the
last couple of years. This excess supply
(plus new construction from builders) resulted in competitive price pressures
and lower average selling prices.
Is it the 1990’s all over again?
The 1990’s were a dirty decade for Ottawa real estate. A recession plus a Liberal Federal Government
that slashed jobs to balance the budget put a real chill on the Ottawa market
for the whole decade. Average prices
from 1990 to 1999 grew a total of only 5.8% (from $141,438 to $149,650) for an
annual average increase of only .58%. In fact, the average selling price actually decreased in
value during 1994, 1995 and 1996, something seen only 5 or 6 times in the
history of the Ottawa Real Estate Board.
Unit sales decreased by 31% from
1989 to 1995, before getting back to 1989 levels later in the decade.
Ottawa Board Membership mirrors results:
As independent business people on 100% commission, the ranks
of the Ottawa Real Estate Board (OREB) closely mirror the level of business and
activity.
Board Membership by year:
1989: 2,566
1999: 1,338
2010: 2,617
2014: 3,025 (estimate)
As one can see from these simple stats; membership dropped
47.8% between 1989 and 1999. Since 1999,
membership has grown approx. 226% to its current level. Growth has already levelled off and could be
expected to plateau or even decrease if the current trend lines continue.
So how does this affect me and my housing plans?
We fully expect to see a continuation of these tougher real estate market conditions for the
foreseeable future and this makes it all the more imperative for both buyers
and sellers to be aligned with an experienced and qualified real estate
professional. If you do not already have
a REALTOR® under contract, we would be happy to discuss your specific
objectives and strategic alternatives for 2015.
Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692
Oasisrealty@rogers.com
www.oasisrealtyottawa.com