Thursday, October 29, 2009

Ottawa enjoying home resale boom


July, August numbers beat totals from a year ago

THE OTTAWA CITIZEN - Ottawa has one of the tightest resale home markets in the province and as a result is expected to see more new home starts later this year. Ottawa's resale home market stayed hot through August, and is expected to soon spur an increase in new home construction, analysts say.

The Ottawa Real Estate Board said a total of 1,216 homes sold in Ottawa last month, a three-per-cent rise over the 1,181 homes sold in August 2008.

That followed an extremely strong July in which more than 1,577 resale homes were sold in Ottawa, an 11.5-per-cent jump from July 2008.

The sales momentum is being buoyed by extremely low interest rates and a shortage of properties on the market.

"Listing inventory is still very low," Rick Snell, president of the Ottawa Real Estate Board, said Thursday. "The capital still remains in a seller's market."
Year to date, resale home sales are up 2.6 per cent compared to the same period last year.

The recent boom marks a big turnaround for the Ottawa housing market, which slumped through the first three months of 2009. At the end of March, 2,479 resale homes had been sold in Ottawa, an 8.7-per-cent drop from the first three months of 2008.

For all housing, the average price in August was $315,074, up 12.3 per cent from August 2008. The average residential home sold for $339,406, up 13 per cent, while the average condominium changed hands for $225,167, an increase of 5.1 per cent.

The trend is similar in Gatineau, where so far this year a total of 4,390 homes have been sold. By this time last year, only 4,025 resale homes had been sold in Gatineau. Canada Mortgage and Housing Corporation believes the average price of a home will increase to $192,800 in Gatineau by the end of 2009.

The average price of a resale home in Gatineau in 2008 was $186,212.

The strong market for resale homes in the capital appears to be foreshadowing a national trend. According to CMHC, while selling prices are still depressed through most of Canada, the volume of resale homes sold is picking up.

CMHC said existing home sales have "rebounded strongly since January" and will total 420,700 units in 2009 and 419,400 units next year.
Nationally, the average sales price is expected to be down for the entire year, to $301,400, before rising to $306,300 in 2010.

The strong national housing rebound in the second half of this year is expected to continue into 2010 and will likely push builders to ramp up the number of homes they will begin construction on in the fall.

Housing starts will reach 141,900 this year and increase to 150,300 for 2010, according to CMHC. Ottawa, Hamilton, Kitchener and Thunder Bay are the tightest resale home markets in the province and as a result are expected to see a boom in
new home starts later this year.

"Improving activity on the resale market and lower inventory levels in both the new and existing home markets are expected to prompt builders to increase residential construction," CMHC said.

Bob Dugan, CMHC's chief economist, said economic uncertainty and lower levels of employment tempered new housing construction in the first half of this year.
"In the second half of 2009 and in 2010, we expect housing markets across Canada to strengthen," he said.

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