COVID-19 SUPPLEMENT – OOE real estate market – Part 1- Pandemic Plays Havoc With Home Listings and Sales, But Prices Dip Only Slightly

Lorne Abugov

In real estate, as with the stock market, the higher they rise, the harder they fall. Old Ottawa East’s red-hot real estate market was off to an explosive start in 2020, continuing an 18-month-long trend that had driven record home sales and prices in the community.

But that chapter of the story ended abruptly in mid-March when the COVID-19 pandemic sucked most of the oxygen from home sales and listings throughout the community, as evidenced by recently released industry data covering the March and April 2020 time period.

The coronavirus lockdown has impacted real estate in Old Ottawa East harder than in most areas of the City of Ottawa. Indeed, figures for April 2020 show that the situation in Old Ottawa East, as reflected by year-over-year home sales, was more than 20% worse than Ottawa citywide and surrounding area statistics for the month.

During April 2020, residential and condo sales in Old Ottawa East plummeted to only five in total, compared with 21 during April 2019, a precipitous drop of 76%. City-wide, the April 2020 data reveals a significant but lesser drop of 55% in residential and condo sales, from 2468 sales in April 2019 to 1100 in April 2020.

Pronounced drop in sales

The extent of the drop in the Old Ottawa East market this April is even more pronounced given that March home sales year-over-year in the community were flat, with eight sales registered in each of March 2019 and 2020. In Ottawa overall, the head of steam in home sales during the first two months of 2020 continued into March 2020, as more homes were sold during the month than a year earlier – 1826 versus 1784.

However, according to several real estate professionals contacted by The Mainstreeter, March 2020 was very much a “lion and lamb” month for the industry. Ottawa home sales and new listings continued to boom for the first half of the month before COVID-19 struck with a vengeance and the bottom dropped out of the residential home market on or around March 15, and the condo market a week later.

April 2020 has proven to be a most challenging month for real estate professionals across Canada, and those in Old Ottawa East were hit as hard as any by COVID-19. Despite the uncertainty for what the next few months will hold, some encouraging signs point to increased sales ahead. Photo by Lorne Abugov

April 2020 has proven to be a most challenging month for real estate professionals across Canada, and those in Old Ottawa East were hit as hard as any by COVID-19. Despite the uncertainty for what the next few months will hold, some encouraging signs point to increased sales ahead. Photo by Lorne Abugov

Kerri Magee is a Broker, Manager for Royal Lepage Performance Realty and resides in Old Ottawa East. She observes that Ottawa faced a lack of inventory for the past two years and that the spring market for new homes was feeling that impact even before the COVID-19 crisis ushered in an even greater inventory shortage.

“When the government decided that real estate would be maintained as an essential service, the industry understood things were going to be scaled back. We were told that open houses would no longer be allowed, and we had many recommendations regarding face-toface contact and meetings. Everything was going digital in terms of looking at houses and meetings with clients, trading via electronic signatures to carry out contracts,” Magee recalls. “While it allowed us to continue, we were really dealing with a much smaller segment of the market because, combined with the inventory shortage, all of this was happening on “a need to move” basis, rather than “a want to move basis” ”.

Unwilling to list

Other popular inner core neighbourhoods saw similar patterns of reduced home sales during March and April 2020, measured again by yearover-year data. For example, sales in Old Ottawa South registered a 70% drop during April 2020 compared to a year ago – from 10 sales in the month in 2019 to only three in 2020.

In the Glebe, the drop in year-over-year home sales for April was only fractionally lower than in Old Ottawa East – 75% versus 76% – from 16 sales in 2019 down to four sales in 2020.

New home listing data for April 2020 shows that homeowners were preoccupied by COVID-19 and unwilling to list their homes, given the social distancing and industry restrictions established in mid-March that suspended open houses and home inspections.

During April 2020, new inventory effectively dried up in the inner core markets, with new listings down from April 2019 by 73% in both Old Ottawa East and The Glebe, and by a whopping 80% in Old Ottawa South. During the month, a combined total of only 9 new properties hit the market, whereas citywide inventory fared somewhat better, with 920 new residential listings and 281 new condo listings coming online. Even so, compared to April 2019, new listings in the month were down by 59% on residential listings and 46% on condo listings.

There are, however, some silver linings, according to real estate professionals. While the impact of COVID-19 has placed a deep chill on home sales and listings, homeowners looking to sell their properties can expect to do so into a depleted inventory of available homes over the coming months. While demand for properties has dropped, it continues to outstrip supply, which means that sale prices across Ottawa have remained somewhat stable despite the pandemic, though they have dipped citywide relative to sales prices in February of this year.

The average residential home sale price in Ottawa was actually 6.8% higher in April 2020 compared to the average sale price one year ago – from $488,826 in April 2019 up to $521,694 this April. However, citywide, average home sale price fell by $34,652, or seven percent, between February 2020 and April 2020.

For the time being, homeowners who do not have to sell, simply aren’t, and those that are choosing to do so are not having to deeply discount their asking prices.

Many unknowns

According to an Ottawa Region market survey forecast issued by Royal Lepage on April 14th, “if business activity in the region resumes by the end of the second quarter, Ottawa may see a year-over-year gain of 2.5 percent to its aggregate home price by the end of 2020. If business activity resumes in late summer 2020, the region’s aggregate home price is expected to remain flat.”

The report concludes: “There are many unknowns about the long-term economic impact of COVID-19 on real estate. However, low inventory is supportive of home price appreciation, or at least home price stability. While we are not expecting to see 2019 price gains this year, at this stage it’s not likely that prices will notably decline either.”

Figures for May 2020 will not be available until early June; however, some real estate agents report an uptick in home sales listing and activity generally among buyers and sellers. Jim Cox of Royal Lepage Performance Realty acknowledges that the April numbers were significant and should not be ignored, “however, it’s not all doom and gloom. Demand is still high, especially in urban core neighbourhoods like Old Ottawa East, interest rates remain historically low and employment numbers seem to be strong so far in Ottawa,” notes Cox.

“To me this shows that Ottawans took the stay-at-home measures seriously, and those who could do so delayed their housing decisions. The vast majority of my clients decided to put their real estate needs on hold during March and April. But we could possibly see the new “Spring Market” this summer.”

For her part, Magee notes that the lead indicators of confidence are starting to return to the market, beyond just the absolute necessary transactions. “Where we had a real shortage of listing inventory and a lot of buyers, those buyers haven’t been absorbed anywhere. And so, while they might have put the brakes on a little bit in April, the anticipation is that those people, for the most part, are not going to go away, and they’re just waiting to re-enter the market.”

According to Magee: “Where we live in this neighbourhood, it’s a high demand area. If you look at average days a home was on the market, you see that it was 57 days in April 2019 and only eight days on the market in April 2020. And the sale-price-to-list price ratio for April of 2019 was 100.4% of asking, and for April 2020 it was 100.2% of asking. So, that tells us that demand is still there, and I know from our own office that we’re still seeing multiple offers on properties in the downtown core areas,” she concludes.

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