Thursday, January 30, 2014

Expect slight increases in home sales and prices this year

OTTAWA — There’s light at the end of the tunnel for the housing market in Ottawa as new home sales begin to recover from a two-year slump and both new and resale prices see a modest increase over last year.

That’s according to Patrick Meeds of PMA Brethour Realty Group, who presented his analysis of the 2013 market and forecast for 2014 at an industry breakfast meeting Tuesday hosted by the Greater Ottawa Home Builders’ Association.

Meeds, who heads up PMA’s new homes division, expects new home sales to increase eight to 12 per cent, with prices edging up three to five per cent. Things will likely be a bit slower on the resale side, where he expects sales to go up two to four per cent and price increases between one and 2.5 per cent, with the number of days on the market decreasing (down to 42 from 48 for condos and down to 41 from 45 for homes).

He said 2013 was “surprising similar” to 2012. There were 4,024 new homes sold in 2013, compared to 4,027 the year before, and 13,873 resale units sold in 2013, compared to 14,326 in 2012.
He attributed the steady performance to consistent interest rates and healthy unemployment numbers over the past few years, a trend he expects will continue.

While new home sales have been steady over the past two years, they are considerably lower compared to 2007, when sales hovered above 6,500. Overall, new home sales last year were 20 per cent below the 10-year average. This may be due to first-time home buyers — a significant driver of sales — having a harder time breaking into the market, says Meeds. The tightening of the mortgage rules in the last couple years means up to 20 per cent of the people who would have qualified for a mortgage in 2010 would not today.

“Right now we have to figure out a way to get them in (the market).” 

Adding to that is a healthy rental vacancy rate that “may keep possible home buyers in rental accommodation,” and “significant uncertainly” regarding government layoffs that caused potential buyers to sit on the fence.

Of the new homes sold last year, 34 per cent were townhomes, 33 per cent were singles, 25 per cent were condo apartments and eight per cent were condo towns.

The sales were also broken down by region: 35 per cent in the south (up four per cent); 27 per cent in the west (up two per cent); 22 per cent in central Ottawa (down five per cent), and; 16 per cent in the east (down one per cent).

Meeds says sales in central Ottawa likely suffered due a “drop off of mid and highrise (condos) as well as increased sales in other areas.”

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