For those of you who think that the market didn’t slow down this holiday season: You’re right.
Earlier in the month, our brokerage marketing manager asked me to contribute a piece our office was producing designed to give predictions on how neighbourhood housing markets in Ottawa would perform in 2020. My prima facie reaction was “well there’s no inventory anywhere in Ottawa and tons of buyers out there so prices are going to keep going up.” Most agents given the question would likely share my opinion and a recent housing outlook published by the Ottawa Real Estate Board certainly supports that assumption.
That being said, the question got me thinking about the last decade in Ottawa’s housing market, so I decided to poke around and see what the industry data was saying as we head into 2020. A great starting point for the purpose of discussing market trends is the MLS Home Price Index (HPI). For those who are not familiar with this measurement, the HPI is a tool developed and maintained by CREA to track fluctuations in housing prices relative to a base year. Ottawa, like most Canada real estate markets is cyclical. Spring comes, market goes up, Winter comes, market goes down (or at least it slows down). The graph below shows this cyclicality in chart form.
HPI performance in Ottawa. November 2009-December 2019. Credit: The Canadian Real Estate Association.
When looking at the trend-line, the seasonal rhythm is clear. Each November, the market slows as indicated by the dip in the trend line. From 2012-2017 we see a trough in winter followed by a peak through spring and summer (ground-breaking stuff, I know, but bear with me). As the market heated up through 2017 and onward, that “dip” turns into more of a plateau owing to more balanced countervailing forces of supply (listings) and demand (buyers) through the winter months. But, as we head into 2020, something has changed. When we look at the graph, the upward climb of the market remains steady notwithstanding a nearly imperceptible ebb in August. This suggests that this year, buyers continued to shop through winter and listings have not kept up.
Moral of the story? If historical data is any indication, Ottawa is poised for another year of rising prices in real estate in a way that hasn’t been seen in the last 10 years.
Interested in learning more? Connect with Thomas.