Resale home prices fell two per cent in May compared with the previous month – another “clear” sign that rising interest rates and soaring inflation are dampening a previously red-hot market, the Ottawa Real Estate Board said Friday.
The average residential-class property changed hands for about $802,000 last month, OREB said, up eight per cent from a year earlier but down more than $25,000 from April. The average condo, meanwhile, sold for just under $473,000, an 11 per cent hike from the same month in 2021 but $1,000 less than April’s average price.
That’s in stark contrast to earlier in the year, when property prices were rising as much as 12 per cent a month.
“We are still a far cry away from a balanced market, but it finally seems to be moving in the right direction,” OREB president Penny Torontow said in a statement.
Overall transactions were also down significantly in May compared with a year earlier. OREB members sold a total of 1,846 residential properties last month, a 19 per cent drop from the same month in 2021 and below the five-year average of 2,031.
It continues a recent downward trend that marked a dramatic shift from the start of 2022, when transaction volumes soared well above historic rates and bidding wars for properties were common.
Weather a factor
“With year-over-year resales declining in March and April, and now with this downward trend continuing into May, traditionally the highest performing month for resales, it is quite clear that Ottawa’s resale market is shifting away from the blazing pace of 2021,” Torontow said.
The veteran realtor suggested the weather played a leading role in last month’s sluggish performance.
“And if rising interest rates, cost of living and inflation aren’t enough factors to cause a pullback, the powerful and deadly storm that brought our city to its knees last month has justifiably impacted the market as well,” Torontow said.
Meanwhile, Ottawa’s stock of available inventory continues to grow as demand for housing abates.
A total of 3,120 additional properties were put on the market last month, about five per cent above the five-year average, despite a sharp decline in new listings in the wake of May 21’s devastating windstorm. OREB said that while the city’s condo inventory dipped slightly in May, the supply of residential-class homes grew by 18 per cent.
Homes are also staying on the market longer. The average property took about 14 days to sell in May, up from 11 days the previous month.
While that’s still a long way from the one-month sales cycle that OREB considers the hallmark of a balanced market, the board said it suggests the city is moving closer to that state.
“We don’t want sellers to panic if their homes aren’t selling as quickly as perhaps their neighbours’ properties did,” Torontow added. “Buyers will also have a little more breathing room if this trend continues.”