The two dizzying, bionic years of a record selling pace in the Ottawa real estate market have certainly slowed and real estate agents are describing a return to normal levels.
This return to normal, however, has raised fears and many misconceptions, says Taylor Bennett of Bennett Property Shop Realty.
Bennett is a co-host of The Bennett Real Estate and Wealth Show on Newstalk 580 CFRA and a regular contributor to CTV Ottawa’s News at Noon.
“I spend a lot of my time acting as a therapist for people who are worried about the market,” says Bennett
He says he hears many myths and misconceptions, multiple times a day, every day from nervous customers. He wants to fix them to help ease customer anxiety.
Taylor Bennett on Five Current Myths
Myth: “Sales are down, the market is crashing”
“While sales are down from last year, it’s important to put last year into context – 2021 was the best year for real estate, setting both sales and growth records. price,” Bennett said.
“So a comparison to the best year ever is like comparing the stats of an NHLers season to Wayne Gretzky’s best year – it’s not going to look very successful. But when you step back and as you take a broader look, we are currently on the same pace as we were in 2019 – the third best year on record.”
Myth: “There are no more multiple offers, I can sell at a low price”
“While it’s true that there are fewer multiple offers than before, there are still some on single, well-priced homes. But even in deals where it’s seller-for-seller buyer, on average, homes are selling for $10,000 above their list price so buyers are willing to pay the asking price,” Bennett said. “However, buyers have an advantage because they now have the opportunity to work in maybe a condition or two for extra protection.”
Myth: “Houses take longer to sell, sellers panic”
“Homes are, in fact, taking 55% longer to sell, but to add some context, the average days on market only increased by a week, from 13 days to 20. Again, we got used to seeing homes sell in less than a week, but that was extremely unusual for Ottawa,” Bennett says.
“In June 2019, it took an average of over 35 days for a home to sell, and that was considered exceptionally fast at that time. Also, keep in mind that there is a difference between sale date and closing date – many sellers are looking for closing dates within 90 days, so if a sale takes a few weeks longer, they still have plenty of time for the desired closing date.”
Myth: “I missed the best opportunity to sell. There is no record price anymore”
“Since the end of 2019, prices on the Ottawa market have increased by more than 64% (from $441,693 to $727,556)! This type of growth would normally take almost 10 years, but it only took 30 months,” Bennett said.
“So if you’re still planning to sell, although you might not be setting a record price for your neighborhood, if you bought your house before 2019, your house has probably gone up way beyond the value it it would have if Ottawa had its usual raises.
“But it’s important to keep in mind that setting a record price doesn’t necessarily mean you’ve made the most profit – even if you may sell for less than your neighbour, if you’ve paid less and/or invested less. money in your home (renovations, updates, etc.) that your return on investment is likely to be far greater than your neighbor’s.”
Myth: “As mortgage rates rise, people will default on their mortgages”
“Rising interest rates have undoubtedly had an impact on the market. In fact, it was one of the main reasons mortgage interest rates were raised, to help stabilize markets. But mortgage rates are about the same as they were in 2019 – again, the third-best year on record.The most recent increase was announced last week to 100 basis points, or 1%. While one percent may seem like an insignificant number, this increase reduced purchasing power by 10% But these increases weren’t announced overnight, many homeowners and buyers were able to take advantage of the lower rates before they go up,” Bennett said.
“Most importantly, when approving a mortgage, banks use a qualifying rate – which is about two percent higher than your actual mortgage rate. Being risk averse, banks build this “buffer room” to protect against an increase in mortgage rates – which is precisely what is happening now, meaning that this recent rate increase should not impact current homeowners or buyers who work with a full-service brokerage and have locked in a guaranteed rate with a mortgage pre-approval, if you are a potential buyer shopping for yourself and have simply used an online mortgage calculator to get pre-approved, you are unlikely to have a guaranteed rate and this recent increase will impact your purchase.”