Day: December 3, 2009

Ottawa’s residential housing market is weeks away from posting its best year on record in terms of unit sales and average price. Despite a slower than usual start to the year, more than 15,500 homes are expected to change hands by year-end, up 11 per cent from 2008 levels, and five per cent ahead of the previous benchmark set in 2007 (14,739). Housing values in the nation’s capital are also expected to climb, appreciating five per cent to $305,000 in 2009, up from $290,483 one year ago.

Job security and stable economic performance are the major factors influencing those considering homeownership, a decision enhanced by rock-bottom mortgage rates. While demand for housing has steadily increased throughout the year, supply has been an issue, with limited inventory reported in many hot pocket areas of the city. First-time buyers continue to represent the lion’s share of activity, driving sales of affordably priced product across the board. Townhomes, condominiums, and low rise apartment units are growing increasingly popular with this segment of the market due to price point. Revitalization in some of Ottawa’s older communities is gaining momentum as entry level buyers choose to invest a little sweat equity in their purchases. Neighbourhoods such as Mechanicsville and Preston St. are areas to watch, with housing values appreciating with every renovation completed.

Experienced purchasers are also taking advantage of ideal market conditions to move up and over to a larger home, better neighbourhood, or different housing type. Sales in the top end of the market—priced in excess of $750,000—have been steady, with the number of homes sold up moderately over 2008 figures. While real GDP growth is expected to fall for the first time in more than a decade in 2009, a solid rebound in the area of three per cent is forecast for 2010. New construction, including a new $21 million sporting event venue and training centre in Rockland, is expected to bolster economic performance in the New Year. Increased enrolment at Ottawa’s four post-secondary institutions has also prompted additional capital expenditures, including a new $112 million, 15-storey tower at the University of Ottawa, scheduled for completion in 2011; two new buildings at Carleton University; a construction trades centre at La Cité collégiale, opening in 2010; and a new $70 million construction trades centre at Algonquin College.

While the federal public service continues to provide a great degree of stability and security in Ottawa, there are concerns regarding continued layoffs within the high-tech sector. High-tech jobs have declined by about 14 per cent year-over-year. However, Ottawa’s employment rate is the highest of the 11 economic regions in the province. As such, unemployment levels in Ottawa, at just under six per cent, are relatively stable and expected to remain well under the close to nine per cent provincial average. Given a continuation of sound economic fundamentals in the New Year, Ottawa’s residential real estate market will stay the course. The number of homes sold by year-end is expected to match heated 2009 levels, while average price is expected to post further gains, rising four per cent to $317,500 in 2010. First-time and more experienced buyers are expected to work in tandem, driving activity at virtually all price points. Despite an increase in inventory in the Spring, seller’s market conditions should prevail throughout much of 2010. Low vacancy rates and volatility in the stock market may also spur some investment activity in 2010, as investors seek multi-unit residential property for a long-term hold.