Hello again and welcome to the New Year!
I wish you and your loved ones a wonderful and prosperous 2023. As we collectively transition to “living with COVID”, I hope we all manage to stay healthy while our lives get a little easier.
The 2022 Ottawa Real Estate Market in Review
Wow, 2022 certainly was a wild ride for Ottawa's market! In a single year we've gone from record-setting sale prices and ever-increasing demand for housing, to rapidly increasing mortgage rates, diminishing prices and a slowing market. The market has absorbed more change in one year than would normally be experienced over several years. But the resiliency of the market remains: there are still houses to be sold and buyers seeking homes.
The first quarter of 2022 was the busiest, and often the most frustrating I've ever experienced. Competition for houses in that market meant high competition and often out paced buyers' budgets, leaving them frustrated at having found a great home but not winning the deal. Meanwhile, many listings had dozens of showings and received several competing offers after only a few days on the market. What a contrast in circumstances between buyers and sellers. These pressures continued well into early summer before beginning to cool. It was an emotional roller coaster ride of stress and anxiety (for buyers, sellers, and Realtors!).
Change came quickly. It rippled across the county as mortgage rates increased. Economists changed their predictions of growing markets to slowing and shrinking ones. Realtors and sellers noticed this change early as properties had less showings and fewer competing bids occurred. Prices leveled out and homes started taking longer to sell. Relaying this message to prospective sellers was challenging because no one wanted less money for their home than their neighbor, friend or relative received only a few weeks before!
By late summer, everyone was talking about the market shift. Many homes were not selling by their offer dates and sellers began to have to think about price flexibility once again. A strategy some realtors used was to price homes under market value. While these properties sold quickly and usually for over asking (falsely maintaining the perception the market was still hot), they were only meeting market value. As more sales data became available, these under-valued sales were easier to single out. Prices were correcting at a rate of approximately 2% per month. Taken on the whole, the price drop that occurred still left 2022 as a positive year as year-over-year prices were still 7% higher than 2021.
A Look at What's Ahead in 2023
Some predict that 2023 will have a bleak start. Interest rate uncertainty will continue to impact the market. If interest rates don't increase further, or if increases are modest the market should level off and begin to recover. However, another large jump in interest rates will continue to depress housing prices.
Rising interest rates have certainly affected household debt with interest on annualized debt payments soaring 16.2 percent. This has unsurprisingly reduced household spending which will have a slowing effect on growth. Canada will also be affected negatively by the slowing of the US economy. These factors are expected to bring Canada's economy into mild recession in 2023 and could enable BOC to begin to cut interest rates by the end of the year
Only time will tell what the future holds! But there is one thing that I am certain of: whatever the market does, I will be here to help you with your real estate needs. I am continually monitoring the market to offer timely advice to my clients. With over 20 years of industry experience, I am no stranger to market challenges and even in markets as unpredictable as ours has been, there are always opportunities to find. I want my experience and knowledge to help you buy or sell in a way that matches your goals.
Should you, your family, friends, or neighbours require real estate services, please contact me.
Melanie McTigue, REALTOR®
West Ottawa Homes & Real Estate