July In Review

Members of the Ottawa Real Estate Board sold 1,326 residential properties in July through the Board’s Multiple Listing Service® system compared with 1,116 in July 2010, an increase of 18.8 per cent. The five-year average for July sales is 1,377.

Of those sales, 307 were in the condominium property class, while 1,019 were in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.), which is registered as a condominium, as well as properties, which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.

“What a difference a year makes. Last summer the real estate market was reeling from the implementation of the HST that saw many buyers and sellers move up their purchases to the winter and early spring. 2011 is a different story, one that looks a lot more like the average year for Ottawa’s resale housing market,” said Board President-Elect Ansel Clarke.

The average sale price of residential properties, including condominiums, sold in July in the Ottawa area was $341,330, an increase of 6.2 per cent over July 2010. The average sale price for a condominium-class property was $270,933, an increase of 11.3 per cent over July 2010. The average sale price of a residential-class property was $362,539, an increase of 4.8 per cent over July 2010. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.

Source: Ottawa Real Estate Board

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June In Review

Members of the Ottawa Real Estate Board sold 1,712 residential properties in June through the Board’s Multiple Listing Service® system compared with 1,543 in June 2010, an increase of 11 per cent. The five-year average for June sales is 1,695.

Of those sales, 378 were in the condominium property class, while 1,334 were in the residential property class. The condominium property class
includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.), which is registered as a condominium, as well as properties, which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.

“It’s obvious that the dream of home ownership is alive and well in Ottawa, with solid sales numbers like these. First-time buyers are out in the market in a big way, due to continued low interest rates, and after last year’s HST-affected spring, we’re seeing a return to what the June resale market usually looks like in Ottawa,” said Board President Joanne Tibbles.

The average sale price of residential properties, including condominiums, sold in June in the Ottawa area was $353,560, an increase of 8 per cent over June 2010. The average sale price for a condominium-class property was $275,996, an increase of 9.6 per cent over June 2010. The average sale price of a residential-class property was $375,539, an increase of 7.3 per cent over June 2010. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.

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Why Little Italy?

     Quickly emerging as one of Ottawa’s hottest neighbourhoods, Little Italy is seeing fantastic growth.  Since 2000, home values in Little Italy have increased 154%.  This neighbourhood has had significant improvements made to its infrastructure in that ten-year period with the addition of three high-rise business towers, the reconstruction of the sewage system and a face lift to the streets and store fronts.  With an abundance of trendy shops, yoga studios, restaurants and immediate access to public transportation, Little Italy is quickly becoming the place to live in Ottawa’s down core.  Closer to the Byward Market and Parliament Hill than Westboro, arguably Ottawa’s most desirable neighbourhood, Little Italy’s location allows for its residence to walk to both of these major attractions and that’s exactly what people want.  When I meet my clients, most want the same thing, the ability to walk down town, without having to live in the hustle and bustle.  They are also demanding high-end luxury finishes that are only offered in very few homes in the area.   Enter SOHO Champagne.

       I know I write a lot about the SOHO product, it’s because I think it’s the best in town. SOHO Champagne is one of a kind.  Located in Ottawa’s Little Italy, this condominium will offer hotel inspired design, amenities and living.  With 15,000 sqft of amenities, this place is a resort.  Need to relax?  Head to the gym, hot tub, pool, steam room, sauna, wine room or the state of the art 24 person theatre.  Going to be home late from a road trip and want some clean sheet?  Call the 24hrs concierge and he can make that happen.   If you have ever wanted to live in a five-star hotel, now is the chance.

     Apparently a lot people do want to live in a hotel.  The launch of SOHO Champagne was the most anticipated condo launch of 2011. On June 2, the owner, Bruce Greenberg, held a Friends and Family Night.  Invitees who were hand selected by the owner himself scooped up 25 units of their own, mostly two bedroom units.  June 4 was the launch to the public.  On this day, the prices of the units were reduced by 2%.  When the doors opened at 12:00pm, over 200 people were already waiting.  The first person arrived at 11:30pm the night before.  When the doors closed at 4:00pm, 230 reservations had been made for 150 units, and not one two bedroom remained, confirming the hype, that SOHO Champagne is going to be the address in 2014.  When complete, this project will only increase demand for this area, making now a great time to buy in.  Let’s take a look at what we can expect moving forward.

      Greg Blok, Senior Investment Specialist with the Bennett Real Estate Professionals, writes in his article, “A Case for Urbanization”, “The Ottawa housing market has increased in value by 7% per year since 2002.  This 9 year period is slightly higher than the 50 year annual average increase of 6.33%.  In the condo market, in 2002, a new condo was priced on average at $250/per square foot, meaning a 1,000 sqft condo was $250,000, whereas today new condos are priced at $460/sqft meaning a 1,000 sqft unit is $460,000.  That means the 9 year annual increase in condo price is 9.3%.

     That means that condos have really only outpaced the complete housing market by 2.3% annually.  This is not a very significant outpacing, in dollar terms, it means an extra $5750 per year.  That does not seem that significant, but considering the fact that most condos take 3 years to build, that is now a $17,250 increase, a much more significant figure. 

     If you were buying a condo today, based upon the pattern over the past 9 years, the condo you buy today at $460,000 would be worth $588,340 upon completion in 3 years.  That appreciate is quite impressive.”  For the full article click here.

       Let’s say that on the day of the SOHO Champagne launch, you secured a J model, a two bedroom unit, on the 12th floor .  I have selected this floor plan as an example because I believe that this particular unit will outperform the other two bedroom floor plan.  Its over 40ft of wall to wall/floor to ceiling windows will not only make this unit highly desirable in this building but city-wide.  You would have also secured the 2% discount mentioned above.  Your unit was held at $447,000 and if the unit is released it will be sold for $459,000. You would have made $12,000 in one day by purchasing this unit, not to mention the potential growth mentioned above. 

     Little Italy is a fantastic spot for Gen Y, the Baby Boomers and everybody in between.  With all of the new development happening over the next three to five years, expect property values to rise quickly.  For a complete list of all of the available real estate in Little Italy, feel free to give me a call or send me a quick email.

May in Review

Members of the Ottawa Real Estate Board sold 1,659 residential properties in May through the Board’s Multiple Listing Service® system compared with 1,686 in May 2010, a decrease of 1.6 per cent.

Of those sales, 369 were in the condominium property class, while 1,290 were in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.), which is registered as a condominium, as well as properties, which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.

According to the Canada Mortgage and Housing Corporation (CMHC) in their Spring 2011 Ottawa Housing Market Outlook, the Ottawa Census Metropolitan Area (CMA) transitioned from a seller’s market to a balanced market in 2010 and will remain in that territory in 2011. CMHC analysts define Ottawa’s resale housing market as balanced when between 35 and 55 per cent of the number of homes listed for sale (new listings) in a given month are sold.

“Sales numbers for May were virtually unchanged from 2010, but prices continued to rise at about the same rate as we have seen for the past few months, demonstrating solid demand for resale housing in our area,” said Board President Joanne Tibbles. “A balanced market offers no distinct advantage to either buyers or sellers, so I’d advise anyone thinking of buying or selling to work with a local REALTOR® to help them achieve their goals. There are different strategies for marketing a home or making an offer to purchase in a balanced market versus a buyer’s or seller’s market. An Ottawa REALTOR® can help make the process easier for consumers,” Tibbles added.

The average sale price of residential properties, including condominiums, sold in May in the Ottawa area was $352,347, an increase of 5.6 per cent over May 2010. The average sale price for a condominium-class property was $261,871, an increase of 6.4 per cent over May 2010. The average sale price of a residential-class property was $378,228, an increase of 6 per cent over May 2010. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.

Sales Down, Prices Up!

Sales of resale homes slipped in January compared to the same month last year. According to the Ottawa Real Estate Board, 675 resale homes were sold during the month, a decrease of 6.1 per cent from the 719 sold in January 2010. The board said the January numbers mark a return to a normal selling pace for Ottawa’s real estate industry. The board said the average selling price of a resale home in Ottawa was $329,657 in January, a 3 per cent increase over the same month one year ago. So even though the number of units sold dropped, an increase in prices affirms that Ottawa real estate a winning investment.

HST and Your New Home

Six months have passed since this gentleman, Dalton McGuinty, has introduced HST in the Province of Ontario,  but there still seems to be quite a bit of confusion as to how it affects the purchase of a new home.  For the present, the HST is only applied to new construction or major renovations and is not applicable to the resale of existing homes.  For us to fully understand HST,  it is necessary to take a step backwards and understand how the GST and PST were applied to new construction prior to July 1st 2010.

Since the introduction of the GST on January 1991, Canadian new home buyers have been paying GST and benefiting from a partial rebate of those GST charges for homes priced under $450,000. The Federal Government applied the GST on a sliding scale basis such that a portion of the GST charged would be rebated, provided the total value of the new home being constructed or renovation being undertaken was less than $450,000. For housing priced above $450,000 the full GST rate was applied and there were no rebates.

For the average new home buyer, the impact of the GST was transparent, as it was the builder who applied for the GST rebates, and new home prices reflected the fact that the builder was crediting those rebates to the buyers.

Prior to July 1st 2010, the Provincial Sales tax (PST) was only applied to the materials purchased for the construction of a new home and the labour and profit components of the new home price were exempt from the PST.

The 13% HST is a blending of the old Provincial Sales Tax (8% PST) and the Federal Goods & Services Tax (5% GST). The biggest difference for the consumer is how and where the Provincial component of this Tax is applied, which includes many goods and services (including hydro, heating, postage, even commercial condominium fees) which were not previously taxed under the PST regimen.

In the case of new housing though the province has sought to soften the impact of HST pricing by providing a Provincial rebate, of 75% of the Provincial portion of the HST Tax to a maximum of $24,000. However unlike the Federal component which is reduced to zero, once the value exceeds $450,000, the Provincial rebate maximum of $24,000 is maintained (for the present at least) independent of the final new home price be that $500,000 or $5,000,000.

Every new home built today in Ontario has some HST built into the price, however the final price to the consumer or list price of the new home is determined based upon the builder’s base price (i.e. cost to build plus profit margin) plus total HST payable (base price x 13%) minus the applicable HST rebates.

Typically on homes priced up to $450,000 the actual amount of HST built into the new home price ranges from about 5% to a maximum of 7%.  Above $450,000, since the rebate of the Federal portion of the HST is reduced to zero and the Provincial portion is capped at $24,000, the additional cost to the home buyer is $8,000 per $100,000 in additional builder base price.

For first time buyer’s purchasing a Condo or Townhouse priced at $280,000, the HST proportion of that price is about $14,000 or about $5,000 more than pre-HST. While, an up-market buyer purchasing a $750,000 home would incur approximately $73,500 in HST expense, or about $37,500 more than incurred under the GST regimen.

The increases in new home purchase prices, attributable to the introduction of the HST in Ontario, has had a negative effect on new home sales in Ontario, however over time as consumers become accustomed to this tax, new home construction and sales will return to historic levels.

Buyers, Strike While the Weather is Cold!

When people think of Ottawa in February, some have visions of the Rideau Canal, Winterlude and Beavertails. Others see this city as a truly frigid and unbearable place where the only way to survive it is to head for warmer climates.  Savvy home buyers on the other hand, are seeing dollar signs.  Like the seasons, real estate markets across Canada and around the world are cyclical, where the average sale price for homes fluctuate from month to month.

With January coming to end, the coldest month statically is almost behind us. Unlike the weather though, Ottawa’s housing market is entering the one month where typically things are the coldest.  The average sale price for homes in February is less than any other time throughout the year, making the next six weeks a great time for you to buy a home.

Based on statistics compiled by the Ottawa Real Estate Board, the average selling price for a residential home in Ottawa in 2010 was $327,225.  Since 2005, February sale prices for residential homes typically fell below average yearly sale prices 3.96%, further than any other month (January = 3.27%).  For example, using the average sales price from 2010, $327,225, and the average drop in sales price for February, 3.96%, one can potentially save a staggering $12,958.11 when purchasing in February, rather than in a hotter spring market.

For more information on the best times to buy and other market trends please do not hesitate to send me an email at tyler@bennettpros.com.