Sometimes described as boring, Ottawa’s steady housing market is slowly gathering steam without the problems seen in Toronto and Vancouver. It may be the closest thing to a perfect housing market.
Conditions in Ottawa’s housing market have tightened noticeably. Listings and inventory levels are trending downward. Sales in June were up nearly 9 percent from a year ago to nearly 19 percent above the five-year average. Almost all the price increases seen in the last year have come in the last three months.
Ottawa’s benchmark home price rose 5.2 percent in June, according to the Canadian Real Estate Association (CREA). The Ottawa Real Estate Board (OREB) reported that the average sale price for June was $434,500, an increase of 8.8 percent from June 2016.
These trends seem hardly noteworthy when compared with the 30-plus percent price increases once seen in Vancouver and Toronto, but they are far healthier and are supported by strong fundamentals.
“Ottawa continues to catch our eye, and if we could trade houses like stocks, we'd still be rotating into this market,” said BMO economists Doug Porter and Robert Kavcic in a note on July 17.
Fundamentals Evolve Constructively
The fundamentals of Ottawa’s housing market have a pleasant lack of red flags.
As large Canadian cities go, Ottawa has a below-average concentration of highly indebted borrowers (loan-to-income ratio greater than 450 percent). The lack of this vulnerability reduces the risk of a real estate correction or crash.
Another component of a strengthening housing market is an increase in population. The net migration to Ottawa of 12,300 (2015 to 2016) was the highest in five years, according to the latest analysis from Statistics Canada.
Ottawa’s unemployment rate of roughly 6 percent is below the national average of 6.5 percent. The city has seen a revival in the high-tech sector once dominated by Nortel. Shopify is headquartered in the nation’s capital and has seen its value rise to more than $10 billion in two years as a public company. It has over 75 millionaire employees. Other tech sectors of growth are telecommunications and automotive automation.
