Local housing prices kept rising last month amid an ongoing supply crunch – prompting the city’s real estate board to suggest Ottawa’s frothy rental market could be encouraging investors to hold on to income-generating properties rather than sell them.
The average residential-class home sold for just over $716,000 in October, a 19 per cent jump from a year ago, the Ottawa Real Estate board said Wednesday. The average condo price, meanwhile, rose 10 per cent year-over-year to nearly $405,000.
Ottawa realtors sold 20 per cent fewer properties last month than they did a year earlier, the fourth month in a row year-over-year sales volumes have declined.
OREB president Deb Wright blamed the lack of inventory for the steady upward price trajectory, saying new buyers are being left out in the cold as available properties are quickly snapped up.
While the 1,960 new listings in October were just under the five-year average of 1,974, Wright said “it’s simply not enough” to meet demand.
The city continues to have only about one month’s supply of resale housing, she said, leaving many would-be buyers with no option but to stand pat.
“Low inventory and a lack of suitable housing options restrict movement along the housing spectrum,” Wright said. “Move-up buyers and downsizers have nowhere to go, so they stay in place, but we need that exchange of properties in the marketplace to free up supply for entry-level homebuyers.”
While sales are down, the board says rental transactions are booming. OREB members have helped rent more than 4,000 properties in 2021, a 40 per cent increase from a year ago.
Wright suggested owners of rental properties who might have put them on the resale market in the past are now retaining homes and condos “for investment purposes” as the pipeline of potential tenants grows.
“This active rental market may be another contributing factor as to why there aren’t more properties coming onto the market for sale,” she said.