State of the Ottawa Real Estate Market | July 2019

Currently, Ottawa is experiencing a “Sellers Market” with high demand for housing and a low inventory.  As of the second quarter of 2019, inventory had declined 27% from 2018 and over 50% since 2016. At current sales rates, we are maintaining 1.6 months of inventory with increased sales and average prices and a decreased time to sell.

Recently one of our REALTORS® asked why “it the market like this?” so we delved into the data we could find.

Why is Demand High?

Employment is strong in Ottawa with an unemployment rate of 5.4% in Ottawa below the national average.  The largest employer in Ottawa is the federal government with 152,000 employees, followed by the high-tech sector which employes 48,300 people in the Ottawa area at over 1,750+ companies. [1]

Ottawa is also home to 4 world-renowned university and colleges which report nearly 130,000 enrolled students.  Due to their notoriety, the number of foreign students has been doubling over the past few years and is anticipated to hit 9-10% of enrollment. [2]

Intra and Interprovincial, as well as international immigration to Ottawa, has averaged 17,455 new residents each year since 2015. [3]  Which represents a need for 7,589 housing units a year.

Why is Inventory Low?

In the rental market, nearly 80% of Ottawa’s 62,000 rental units were built before 1990.  [4] Purpose build rentals have been diminishing for decades and according to CMHC reached a record low of 1.6% vacancy rate in 2018.  Meanwhile, FairBnB has reported that 1,054 units are being run as short term rentals, further depleting the rental stock in Ottawa.

On the homeowners front CMHC reported 5,394 completed dwellings in 2017 and 6,845 completed in 2018.  Which is well below the needed 7,589 housing units for the population growth, further accentuating demand.

Affordability

Global News reported in January 2019 that Ottawa remains one of the most affordable housing markets in Canada due to a combination of Ottawa having the highest median income in the country and only 1 of Ottawa’s 10 greater housing districts having an average price that would be unaffordable to a household with a median income of $91,212.

This affordability has begun to attract some national and international attention for investments, especially considering Toronto and Vancouver’s foreign resident taxes and Toronto’s 2nd land transfer tax. 

The population growth for employment and education is outpacing construction, a declining rental supply, and international attention on the affordability of Ottawa housing has led to the market we are currently experiencing in Ottawa.

As always if you’d like to know how this affects your neighbourhood or home give us a call to chat real estate. 613-788-2113

[1] Statistics Canada Labour Force Report June 2019

[2] CAPITAL Magazine October 2018

[3] World Population Review: Ottawa Population 2019

[4] Ottawa Business Journal July 6th 2018 

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