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Ottawa Real Estate
The Ottawa real estate market is a constantly evolving and complex system. Many people are asking questions about the current state of the market and what it means for them. In this blog post, we will take a look at some of the most common questions that we are being asked right now. We will also provide our expert opinion on what to expect in the coming months. If you are thinking about selling your home, or if you are curious about how the market is affecting buyers, then this post is for you!
What are we currently experiencing in the market? The last 6-8 weeks have seen a cooling off of sales. As per the Ottawa Real Estate Board, sales were down 23% in April as compared to last year. Although prices do remain high. We are seeing an increase in months of inventory and days on market for properties. Some contributors to this are the surge in the Bank of Canada’s key interest rates, the new federal mortgage rules that came into effect, the implementation of a two-year foreign ban, and some uncertainty around the economy.
The Bank of Canada has already increased the key interest rates multiple times and forecasting additional interest rate increases in the next few months to temper inflation. The considerable issue with this is that Buyers, still have to qualify with the mortgage stress test, therefore 2% higher than the current market borrowing rate. For example, if the rate is 4%, Buyers have to qualify at 6%, which significantly reduces their borrowing power.
What happens next? Will there be a recession, a correction, or even a bubble?
Unfortunately, all signs point towards at least a market correction. A market correction is defined as a reduction in the value of an asset or assets, usually real estate and stocks, to more accurately reflect the true worth of those assets. This can happen for several reasons, but typically it is due to an over-valuation of those assets.
In the current market, we have seen over-valued Real Estate prices, that have continued to increase at an unsustainable rate. Another factor is that inventory is still low, but we are seeing in Ottawa an increase in months of inventory and days on market. We are seeing key interest rates continue to rise, which reduces borrowing power for Buyers. Further, all levels of Government are doing everything in their power to make housing more affordable and to increase inventory.
It is important to remember that these are just a few of the many factors that can affect the real estate market. When making any decisions about buying or selling, it is important to consult with a professional Real Estate Agent who can help you understand these factors and will ultimately impact your specific situation.
If you have any questions about the Ottawa real estate market please contact Marc-Andre Perrier, with Century 21 Action Power Team!
