Houses are selling rapidly, often for tens or even hundreds of thousands more than asking. If you are deciding whether to buy or sell in Ottawa right now, hopefully this guide will help.
...and more
October 16, 2020
If you are thinking of buying or selling a home during the Covid-19 Pandemic, you likely have a great number of questions. Is now a good time to buy? Are houses really selling for 10,000 to 200,000 more than listing prices in Ottawa? Is it safe to view homes in person? In our 12+ years of being Ottawa Realtors, we have never seen as much volatility and urgency in the market as there is now. We'll do our best in this article to answer your questions.
Almost every home that we have helped buy or sell in the last several months has sold with multiple offers. No matter which part of the city,
The Canadian Real Estate Organization (CREA), reports that across Canada, the number of homes sold is up by 30.5% in July of 2020 as compared to the previous year.
House prices across Canada are up by 14% compared to last year. In Ottawa, this number is even higher. CREA reports that house sales are up 17% compared to the previous year.
Here are some interesting statistics from CREA on Ottawa house sales:
Increases of this magnitude are not normal for Ottawa! A 22% increase means that a house that sold for $500,000 in July of 2019 would sell for about $610,000 in the summer of 2020.
Every real estate transaction that we have helped broker during the pandemic has ended up in a multiple offer situation. If you have been looking at purchasing a home recently, you'll understand how frustrating this can be.
We recently submitted an offer on a home listed just outside of Carp, in the far west of Ottawa. The home was listed at $975,000. Historically, houses in this price range will tend to be on the market for weeks or months before selling, and would usually sell for $10,000-$20,000 below the asking price. It would be uncommon in the past for a house in this price range in rural Ottawa to have multiple offers. In this situation though, the house had five offers and sold that day unconditionally for $1.1 million.
Another client of ours recently viewed a small older home in Bells Corners. This 1000 square foot home sold for $505,000 despite being listed at $425,000.
Houses outside of the city are not immune to multiples either. We helped a client buy a home in Constance Bay for $465,000. It was originally listed at $425,000.
If you are looking to purchase a home right now, be prepared to pay more than the asking price.
Most listings right now will contain a phrase that says that "no offers" or "no conveyance of offers" until a certain date.
"No offers until", or, "offers to be entertained at": This phrasing is a little different from "no conveyance of offers". In this case, the listing Realtor will still be waiting until a particular date and time to show all of the offers to their seller client. However, this wording opens the situation up to the possibility of a Realtor submitting a bully offer before that date.
"No conveyance of offers": If this phrase is in the listing, it means that even if you make a bully offer, the Realtor is not allowed to even tell the sellers that a bully has come in until their specified date and time.
To explain this further, let's say that a house goes on the market on October 1, 2020 and the listing says, "no conveyance of offers until October 3, 2020 at 6pm". This means that any offers that are submitted will not be shown to the seller or even remotely considered, until 6pm on October 3.
But, if the listing says, "offers to be entertained October 3, 2020 at 6pm", you could submit a bully offer which the Realtor would show to the sellers before that time and date. This is generally done when the buyer wants to place an outrageously high offer.
Many listings now are using the "no conveyance of offers" phrasing now, knowing that almost every sale is going to result in multiple offers that are well above the asking price. It is usually in the best interest of the seller to allow each of these multiple offers to come in and be assessed rather than to accept a single bully offer.
In the past, much of our negotiation work done in-person. We would meet with the client to discuss negotiating strategies at the seller's / buyer's home or at the Realtor's office. Now this is mostly done electronically.
One of the hardest decisions to make is determining how much over the asking price to offer. An experienced Realtor will help you make this decision by looking at recent home sales during the pandemic (if available). We also have access to an app called Showing Time which shows us how many showings have been booked for each listing. If you are putting in an offer on a house that has had a large number of showings, then be prepared to bid high.
Knowing how high to bid can be tricky. While the sellers can see the amounts offered, the buyers are not told this information. An experienced Realtor will help you determine how high your offer needs to be in order to be considered. It all comes down to how many offers have been submitted for the Realtor to advise.
When the time comes for offers to be presented, the Realtor and seller will discuss submitted amounts and conditions. The highest price does not always win. For example: If one offer is $5000 less than another, but has no conditions, it still could be the one that is accepted. Conditions of financing or inspection could be negative.
For our clients, we recommend coming in with as clean an offer as possible. This means in advance obtaining:
Prior to Covid-19, it was common for negotiations to last for several days. Now though, with most houses having multiple offers, it's not uncommon for us to put in an offer and then inform our clients that they have a firm deal the same night. There are rarely extensive negotiations. Rather, the offer that is the most attractive to the seller is chosen as the winner.
In most cases, when you view a house you will be asked to wear a mask and not touch anything. Many homes will have hand sanitizer at the door for you to use.
Most listings we see state that each viewing is limited to the Realtor and a maximum of two adults. Also, children are not allowed for most showings.
While Ontario started allowing open houses in August of 2020 during the pandemic, we have found that for obvious reasons, there are fewer open houses now. Many sellers are reluctant to have people walk through their house given that most are selling extremely quickly. There is often little need for an open house to drum up attention. Note: In October of 2020, realtors in Ottawa and several other parts of Ontario were advised NOT to run open houses again due to the increase in Covid issues happening.
Initially during the pandemic everyone viewing a house needed to sign a form stating they did not have symptoms of coronavirus. The rules changed recently so that now, only the Realtor needs to sign the form to vouch for themselves and their clients. We have seen some brokerages relax this rule lately and in some cases, no form is required - just a statement in the listing to observe Corona protocols.
We've never been in a situation like this before. Given that none of us know how long the pandemic situation will last, the answer to this question will likely remain unknown.
According to Moneysense, even with house prices being high, interest rates are at historic lows. Their advice is, "If you are able to buy and hold a home for the medium to long term, this might be a good time to buy."
What most people really want to know is whether house prices in Ottawa will remain at these high levels. If you overpay for your home today, will you regret it when it comes time to sell in the future?
Royal Lepage has forecasted that the aggregate price of a home in Ottawa will continue to rise over the fourth quarter of 2020. The CMHC predicts a slight drop in Ottawa house prices next year due to weaker demand for homeownership because of job and income losses during the pandemic. They do however say that, "As demand recovers in 2022, prices are predicted to tick upwards due to limited supply caused by fewer homes being listed on the resale market and lower levels of new home starts."
Given that we sell homes, we're probably a little biased, but we feel that the currently low interest rates are making it a good time for many to be able to afford a new home even though house prices are increasing.
The increase in house sale prices is happening across the entire city of Ottawa, including the outskirts. We have seen an increase in demand for rural property with several of our clients wanting more space. More and more, families are looking for a house with land, with an office so they can work from home, or with room for home gym equipment.
Our guide to understanding Ottawa's neighbourhoods can help you decide which parts of the city to consider. Another popular page on our website is this article which outlines our picks for the best neighbourhoods in Ottawa. Some of our favourite neighbourhoods include Kanata Lakes, Morgan's Grant, and Stittsville.
If you would like help deciding where to move in Ottawa, please do contact us for more information.
We have access to all MLS listings 24 hours before they are available to the public. We'd be happy to create a list of your criteria and help you sleuth out the perfect home.