Let’s talk about one of the factors that are contributing to the hot Ottawa real estate market we are experiencing, Low Inventory.
Inventory is what we refer to as the number of homes for sale on the MLS® provided by the Ottawa Real Estate Board. It does not include New Construction Homes for the most part or privately offered homes.
Inventory for the last 5 years
As of the end of April, we had 1,586 homes listed for sale in Ottawa and the surrounding area, 17% less than the year before, 1,920 in April 2020, and 80% lower than the 8,123 we had in April 2016.
You can see the drastic decline in the number of homes in this year over year chat and understand how the Inventory has contributed to the commoditization of housing in Ottawa.
Another factor we consider in the housing market is the Absorption Rate, or how long it will take the current housing Inventory to sell at the current rate. In April 2021 we sold 2,402 so it would take 0.7 months for the market to Absorb the current Inventory (1,586).
Here’s an example of the Absorption Rate over the last 5 years for April, and you can see with the exception of the Lockdown Blip it has been declining rapidly.
As a general rule under 3 months of inventory is considered a sellers marker and over 6 months is considered a buyers market.
The lockdowns and ongoing pandemic have created 2 distinct groups in real estate, those who are hunkered down awaiting the end and those who have realized they need a drastic change in order to have a comfortable environment during this challenging time.
Before the first lockdown approximately 50% of people polled by a Nanos study reported considering selling or buying real estate, when revisited a few months later only 7% reported a desire to sell their homes where as 47% still reported wanting to buy. A massive gap that has revealed itself in the market over the last year.
What about new home’s you ask? While we see 5,000 – 6,000 new homes built in Ottawa each year, the supply has unfortunately not met the demand we have of new families moving to Ottawa.
Interprovincial and Intraprovincial migration (1) are huge factors in Ottawa’s population growth with nearly 70% of Ottawa’s populating growth (2) coming from Montreal, Atlantic Canada, Northern Ontario, Eastern Ontario and the Prairies.
Here’s a look at Ottawa’s housing construction vs estimated yearly household growth.
Hopefully that helps you understand a little more about the current market. While we know it’s been challenging, here at The Tulip Team our agents study the market and as professional REALTORS® are here to guide you with all your real estate needs, in any market.
And give us a call if you have any real estate questions. 613-788-2113