Listings, new home starts slip as Ottawa office vacancy rates get tighter
By Robert Bostelaar, The Ottawa Citizen
After months of record sales, scarce inventory and frequent bidding battles, peace has descended on the Ottawa home market.
Realtors say the supply of unsold listings rose in June for the first time in 2010, while sales slipped 15 per cent for the second decline in as many months.
"What we see here is a return to the stable, steady market conditions that Ottawa tends to experience," said Pierre de Varennes, president of the Ottawa Real Estate Board.
Despite the recent declines, home sales for the first six months of 2010 remain ahead of last year.
Real estate board members have sold 8,489 properties, up seven per cent from 7,932 in 2009.
New-home construction may also be slowing. The value of residential building permits dropped 22.3 per cent in May. For the year, however, housing permits remain well ahead of 2009.
And yet another sector, commercial real estate, is showing a shift. Kanata's office vacancy rate, which shot up to nearly 20 per cent after the departure of several big technology firms, has fallen to 11.2 per cent as new companies fill the void, according to one market tracker.
But the biggest change is in resale homes, where de Varennes said a long-standing seller's market is giving way to an even field for buyers and sellers.
The board has six per cent more available listings than in June 2009.
The average price for a property sold through the Multiple Listing Service was $326,572 in June, down from $333,408 a month earlier. It was only the second month-to-month decline in 2010.
But year over year, "prices continued to grow at a healthy rate," indicating market stability, de Varennes notes. June's average price was 6.4 per cent above June 2009.
Angie Zarysky, a representative with Royal LePage Team Realty, said, "I think a balanced market is a healthy market. There's enough inventory now to give people choices.
"I expect it to continue to be strong, and prices in Ottawa continuously go up. They don't seem to have the ups and downs that other cities have."
Rising mortgage rates and the introduction of tougher lending rules meant to discourage high-risk speculators are thought to be slowing sales across Canada.
In Toronto, MLS sales fell 23 per cent in June from a year ago, and in Vancouver, the drop was even sharper at 30.2 per cent.
As well, buyers in Ontario and British Columbia may have pushed forward purchases to avoid the July 1 introduction of the harmonized sales tax, which applies to real estate commissions and legal fees.
Zarysky said the money supply may be tighter, but "these are still the best mortgage rates we've seen in a very long time."
Some properties are taking longer to sell and vendors are more likely to reduce their prices, but a well-priced home in a desirable neighbourhood still could attract offers above the asking price, she said.
Zarysky, who has sold real estate for seven years, said television-style "bidding wars" are not the norm. "It's just several people interested in the same property ... and as a result you basically make your best offer."
Despite the big drop in residential building permit values in May, Ottawa home construction values are up 28 per cent for the year, Statistics Canada reported.
Permits for multi-family dwellings, which were down 38 per cent on a seasonally adjusted basis from a month earlier, led May's decline. Single-family homes were down just four per cent.
Permits for all sectors, including industrial and commercial, fell 11.5 per cent from April, but remained 7.2 per cent about the first five months of 2009.
Across Canada, permits fell by a much-larger-than expected 10.8 per cent in May, slipping to $6 billion, Statistics Canada reported.
Analysts polled by Bloomberg had called for a two-per-cent month-over-month drop.
The decline follows two previous monthly increases, Statistics Canada said.
In the commercial sector, the strengthening Kanata market helped reduce Ottawa's overall office vacancy rate slightly to 6.1 per cent in the second quarter of 2010, said a report from Colliers International.
Driving the Kanata improvement was Research in Motion's move into 150,000 square feet of space formerly leased by Dell at 1001 Farrar Rd.
Colliers expects lease rates to rise as the Kanata vacancy rate drops below 10 per cent by early 2011. Still, "Kanata continues to be an ideal place for tenants who want A Class office space at a competitive rate and do not need to be centralized in or around the downtown core," the report said.
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