Back in January, I wrote a blog about the state of the Ottawa housing market with the goal of setting the scene for 2020. Needless to say, life was considerably different back then. At the time, the market was poised for a record year. This past winter was, in fact, the first time in decades that Ottawa did not see a downturn or “flattening” of the Home Price Index coincidental with the arrival of winter. Prices were on the rise, listing inventory was down, and for better or worse, 2020 looked to be set up to be a wild year for real estate in the Capital. Fast-forward to spring, and this prediction has certainly proven to be true, though for far different reasons than we had predicted.
Functionally, everything has changed
If you have been (or are) involved in the real estate market during our current global pandemic, you have no doubt noted that things are a bit weird out there. Showings are done under near-laboratory conditions, there are legal disclosures to sign and a laundry list of clauses are added to otherwise straight-forward offers. The days of risking life and limb tripping over an endless sea of shoes while entering an open house are over. Non-overlapping showings, facemasks and gloves have taken their place. Buying or selling a house is complicated these days, and with good reason.
Practical considerations are having a big impact on the number of homes available for sale
The government’s stay-at-home orders along with wider pragmatic considerations related to employment stability have had far-reaching impacts on market activity here in Ottawa. Thus far, the most obvious fallout of the pandemic has been that few people are looking to sell during the unrest. Whether that be because sellers are hesitant to allow groups of people through their homes, or if they are concerned that they won’t get the best price for their largest asset (or both), the data clearly shows that the number of homes for sale in Ottawa has taken a tumble in comparison to this time last year. This has been a trend since the second week of March when Ontario’s state of emergency was declared. To put this in context, there are currently less than half as many homes on the market relative to the same time last spring. Clearly, many people have elected to shelve their decision to sell for the time being, but for those considering putting their house up for sale, there are many unknowns.
Should I be selling my home?
The short answer is that it depends on a number of factors. One obvious consideration is that fewer buyers in the marketplace equates to a less competitive sale and potentially a lower return. There are also practical considerations vis-à-vis putting your house’s best foot forward. A good listing plan begins by preparing your house for sale including undertaking necessary repairs, refreshing paint, landscaping, and decluttering. Then comes your Realtor’s task of pricing your home and executing a top-notch marketing campaign. These activities are undoubtedly limited in today’s environment due to social distancing and regulations eliciting mandatory business closures. The inability to conduct open houses alone is a big factor in generating hype for your home and since those are a definite no-go, you may end up with fewer offers which may translate to a lower selling price.
What if I HAVE to sell?
All is not lost if you are in a position where you absolutely need to sell, and there are many people out there in that position. In fact, if this COVID pandemic has taught us anything about Ottawa’s real estate environment, it has re-affirmed Ottawa’s position as an uncommonly resilient marketplace. To date, the impact on Ottawa’s market can be best viewed as more of a deceleration of a red-hot housing market. From a practical perspective, it also means that despite the disruption, your house is still likely to sell for more than it would have in the spring of last year. In fact, April numbers released by the Ottawa Real Estate Board (OREB) show that the average sale price of condos in town has increased by 6.3% versus April of 2019, while residential-class properties have risen by 6.8%. This of course pales in comparison to the first quarter numbers which saw double digit growth year-over-year, but nonetheless it paints a much rosier picture than one would imagine given the circumstances. For data hungry sellers AND buyers, the board has actually committed to providing weekly market updates to help keep tabs on trends during the pandemic.
Get a Realtor to help…seriously…
When it comes to listing your home for sale, now more than ever, enlisting the help of a tech-savvy Realtor in specific can go a long way. Blue Panda Agents excel in the tech space and we are well-versed in the newest tools including 3D tours, virtual showing, VR, and others. This is certainly NOT the time to try and DIY the sale of your home. Real estate pros are constantly learning innovative strategies to maximize your return and in a rapidly evolving marketplace, this specialization goes a long way to ensure you get the best price possible for your home. Beyond basic marketing and negotiating tools, legal protections are also especially important these days. Realtors work closely with legal professionals to make sure that offers are drafted in a way that protect both parties. Risks associated with closing delays such as the buyer or seller being placed in quarantine due to exposure to COVID-19, or delays at the land registry office require special attention during this unprecedented time.
So, is this a good time to buy?
I’ve had a great number of clients, family, & friends reach out during the pandemic asking whether, given the prevalence of “motivated” sellers in the marketplace paired with fewer buyers, is this a good time to get a deal? The answer to this question, largely depends on what you consider to be a “deal”. If you are waiting for a fire sale on top notch properties in this city, I would suggest you don’t hold your breath. While some properties might draw less attention these days than they would have pre-COVID, you are still likely to end up competing against multiple other interested buyers when putting in an offer on a property. Out in the marketplace, this is resulting in, for instance, 4 or 5 offers instead of 20, but you can still expect to pay over the asking price for desirable properties that are appropriately priced.
On the bright side, COVID restrictions can also result in a more civilized transaction since deals are often conditional on viewing the property in person. Pre-COVID, no-condition offers were commonplace, and while many properties are still holding offer presentations and selling without conditions, some sellers, to reduce exposure to COVID are requesting that showings be done virtually with offers conditional on the buyer viewing the property in person. This gives interested parties more flexibility to include other conditions during that period such as a home inspection, financing, etc.
A word of caution
No matter your situation, during this unprecedented period, we should be mindful that we all play a role in stemming the spread of a virus that has adversely impacted the health and general well-being of thousands of people in our country. While some people really need to buy or sell during COVID, prospective buyers and sellers should carefully consider whether or not this is the right time to put themselves in contact with others. Your Realtor has a responsibility to keep you, your family and the public safe whether they are listing your home or helping you find a place to live.
Not all market segments are responding the same
As always, different market segments (eg., Condo vs freehold, or urban vs suburban vs rural) are not all reacting to our new situation in the same way. If you are curious to know how real estate in your neighbourhood is responding through COVID-19 or if you are in the market for a new home, feel free to get in touch!
Note: This article was published on May 22, 2020. We acknowledge the fact that news surrounding COVID-19 changes daily. For the most up-to-date information, please consult your local health officials.
All statistics provided by OREB.