ASK AND YOU SHALL RECEIVE

The bidding wars are on in Ottawa housing market

If you want to understand some of the forces now gripping Ottawa’s real-estate market, take a stroll down Fentiman Avenue in the heart of the leafy district known as Rideau Gardens.

It’s a quiet stretch of carefully maintained, two-storey homes across the canal from Lansdowne Park. Fentiman Avenue is very nearly quaint — and outsiders have been willing to pay a fair bit to live here.

In the past three weeks, separate owners listed homes at 49 and 68 Fentiman Ave. Each property sold in just six days.

The 73-year-old house at 49 Fentiman Ave. was listed at $785,000 and was snapped up on May 23 for $860,000.

Down the road, the 91-year-old property at 68 Fentiman Ave. went on the market at $750,000 and sold on May 28 for $815,000.

“The number of listings attracting multiple bids has jumped hugely over last year,” says Paddy McCarthy, one the Royal LePage Team Realty agents involved in the sale of 49 Fentiman Ave., “but the house was exceptional; the owners had done a lot of work to get it ready.”

McCarthy and his husband and real-estate partner, Andy McCarthy, found out about the potential listing because they live in the neighbourhood.

Finding properties to list often takes a lot of work; actually selling homes is the easier part of their job.

But, like the city’s other realestate agents, the McCarthys also represent potential homebuyers in other transactions. And in this market that’s the really difficult part.

“This market is absolutely driven by a lack of inventory and a surplus of buyers,” says Paddy, “Some of our clients might make four, eight, 10 offers before getting a sale,” he adds.

Ottawa over the past year and a bit has morphed from a sane, balanced market into one that favours sellers.

In fact, the city doesn’t have a single real-estate market. Rather, it has hundreds of them. This is the reality understood by Ottawa’s 3,000 real-estate agents who collectively sold nearly 1,800 homes in May and close to 500 condominiums. Total sales volume: $1 billion.

It means little to say that residences sold for an average $464,400 last month — up 6.3 per cent from a year earlier — or that condominiums sold for an average $281,250, up 3.4 per cent year over year.

These citywide averages disguise a cauldron of activity, wide price ranges and isolated spots of downright insanity.

Paul Rushforth, owner of the real-estate firm that bears his name, has seen evidence of the latter. His team listed a three-bedroom home in Barrhaven that recently went on the market for an opening price of $300,000. It attracted 30 offers and sold for $332,000.

“That was unusual,” says Rushforth. “Two to four offers is more typical.” And, as to why 30 offers didn’t drive up the sale price of the Barrhaven property more sharply, “Ottawa is still a price-sensitive market,” Rushforth adds, “You have to price your home correctly.”

It’s been a good year for Rushforth. He estimates his team of 18 agents will sell more than 800 homes and condominiums — compared to 669 in 2017. This is one consequence of the tightness of the market. When there’s a shortage of listings, houses that are available tend to sell more quickly.

Consider the May data from the Ottawa Real Estate Board, which tracks the sales activity of its 3,000 plus member agents. (This data does not include sales of new residences).

There were about 4,000 active residential listings at the end of May, down nearly 16 per cent from a year earlier. There were also nearly 1,400 condominium listings, down 20 per cent year over year.

Residential properties that sold in May had been on the market for an average of 34 days compared to 41 days a year earlier. Condos last month took 46 days to find a buyer compared to 70 in May 2017.

The tightness of the market poses difficulties for certain buyers, the military in particular.

“It’s been a real challenge this year,” says Chris Scott, a realtor with Keller Williams Canada, which focuses on placing military employees who are relocating from other bases into Ottawa.

Scott advises his clients to do as much advance work as possible to expedite bids. His company maintains a portal, accessible by clients, which shows up-to-the-minute listings and sales activity. Scott urges his buyers to seek preliminary approval from their banks for financing the house purchase.

Not surprisingly, newcomers to Ottawa are keen on buying properties near the new Department of National Defence headquarters at 60 Moodie Dr. About 3,500 employees have moved into the refurbished facility from other parts of the city, with another 5,000 due to join them in stages. This could explain why some of the real-estate districts reporting the fastest growth in this city are clustered around the new DND campus. Stittsville has been especially popular.

Last month saw the sale of 40 residences in Stittsville compared to just 28 sales in May 2017. The average price was $539,565 — up 8.5 per cent from a year ago.

This may be a little pricey for lower military ranks. Just to the east, 189 properties sold in Kanata for an average $446,094 in May — up 8.1 per cent year over year. Within the Kanata district, the biggest price movement for residential properties was in the sub-districts of Glen Cairn and Hazeldean, where resale values for residential properties jumped 24 per cent to a still modest $371,100.

That’s an important point about the real estate districts monitored by the Ottawa Real Estate Board. There are huge variations within districts, reinforcing the truism that all real estate is very, very local. (The differences tend to be less stark when using the board’s benchmark data, which adjust for differences in roof types, number of bathrooms and so on and provide a better underlying view of the real-estate market. The benchmark data for May was unavailable this week.)

In the Manor Park district, for instance, two properties close to Rockcliffe Park sold last month for an average $952,500 while another house, in the eastern part of the district, sold for just $457,000. In Rocky Point, along the Ottawa River in the west end, buyers paid nearly $1.1 million for one property while three other homes sold for about $650,000 apiece.

In general, the strongest price gains were in the west and east, along the future light rail transit line, though it’s possible this is a coincidence. Downtown, Sandy Hill, Vanier and Manor Park all reported significant rises in average prices for residences sold in May.

Sandy Hill, in particular, was hot. Five properties there sold for an average $815,500, up 35 per cent from the average for the three homes that sold there a year earlier.

Vanier was something of a surprise. Most of the sales took place in the sub-districts north of Montreal Road and south of Beechwood Cemetery — near the site of the proposed Salvation Army centre. Average prices in these areas last month climbed to $412,900 — up 23.4 per cent from May 2017.

An outlier in the east, involving the sale of just four properties, was the nearly 40 per cent yearover-year jump in average prices to $321,125 in Carlsbad Springs. The town may be benefiting from the recent revelation that Amazon is preparing to build a distribution centre nearby.

In the west, the top gainer was the Britannia-Lincoln Heights district, where properties that sold in May for an average $605,100, up 59 per cent from a year earlier. However, as with Manor Park and several other districts, this is likely a function of a small sample. The district saw four sales in May this year and just one last year.

Not all Ottawa’s 46 real estate districts showed year-over-year gains. Indeed, 11 districts reported declines, for the most part reflecting differences in the size, age and location of houses listed last month compared to a year earlier.

In Rockcliffe Park, five homes sold last month for an average $1.2 million compared to 10 properties unloaded in May 2017 for $1.6 million each. No one believes property values there have really plummeted 28 per cent.

More representative of the city ’s house price trends is the GlebeOttawa East district — the one in which the two Fentiman Avenue sales occurred. The average price for 27 properties sold was $895,400 — up 4.2 per cent year over year, just slightly below the average for the city.