New home sales continue to slide
There’s been a lot of negative talk recently about home sales (some of it a little overblown), which makes it not surprising to discover that the latest new home sales numbers for Ottawa are down.
But it’s not as bad as it seems. PMA Brethour Realty Group notes in its monthly report that new-home sales for February are down 7.4 per cent from February last year, to 315 from 340. That’s the lowest February total since 2009 and also down from the 10-year average for the month of 407 sales.
Much of the drop can be attributed to the lingering effects of federal changes to mortgage rules that restricted the buying power of potential homeowners, along with public service cuts and the slow Canadian economy.
And while it’s “definitely a concern to new home builders,” says John Herbert, executive director of the Greater Ottawa Home Builders’ Association, he adds: “The declines in both new and resale homes are small to date and I don’t believe will have any lasting impact on the market.”
Traditionally, the Ottawa market does not see the wild swings found in other urban centres, thanks to the stability provided by the large core of public service workers.
“So as long as (the federal government does) not decide to eliminate more permanent positions in Ottawa, I think we can weather this storm quite well,” Herbert says.
The general consensus is that Ottawa sales will remain low until about mid-year and then return to normal during the second half of the year, he says. Having just returned from the annual conference of the Canadian Home Builders’ Association last week, he notes that economists there were split on the forecast for the country as a whole, with one seeing a recovery in 2014 and another forecasting a further decline to 175,000 units. (Canada Mortgage and Housing Corp. is forecasting a decline to 190,000 starts in 2013 from 215,000 starts in 2012.)
“We expect better numbers for the coming spring market (in Ottawa) — still low, but getting closer to our 10-year
‘The declines in both new and resale homes are small to date and I don’t believe will have any lasting impact on the market.’
JOHN HERBERT Director of the Greater Ottawa Home Builders’ Association
average,” says Patrick Meeds, PMA Brethour’s managing director of the new home division. “Pricing has held steady, with some strong bonuses.”
Herbert says the hardest hit category of sales so far are high-end single-family homes “and then as you work your way down through the various housing forms, the lowend suburban product remains relatively strong.”
As predicted earlier this year by PMA Brethour vicepresident Ron Desjardins, the shift in sales from east to west is starting to show, with the east end losing seven percentage points of market share in February that has been picked up by the south (two percentage points) and west (five percentage points).