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Ottawa home sales slow as interest rate brings about hesitancy

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Ottawa's real estate market typically slows down during the colder months of the year, and this year is shaping up to be no exception.

According to the Ottawa Real Estate Board (OREB) 724 homes were sold through the Multiple Listing Service (MLS) in November, representing a modest 1.6 per cent decline compared to the same time last year.

But home sales were 31.8 per cent below the five-year average and 27.4 per cent below the 10-year average for the month of November.

"I've been leading this team for about 10 years now, and I've never managed or lead a group of people who work so hard for so little. Sales are down, and when sales are down, so is the income of the average realtor," said Bill Meyer who leads the Tulip Team at RE/MAX.

"We had some real special years during the height of the market during COVID, so when we compare it strictly to that, it's a big difference. Sales are down probably about 12 per cent this year and about 20 per cent the year before in the number of homes selling."

It's a trend that is largely fuelled by the Bank of Canada's interest rate of five per cent. The highest rate the country has seen in more than 20 years.

The central bank announced on Wednesday that it is holding its lending rate steady, at least for now.

"Buyers are just playing the waiting game to see when rates come down, how far they will come down," said Meyer.

"It's tough because what will probably happen is as rates come down, more buyers will come into the market and prices will start to go up. So it's tough to play the waiting game."

The average sale price for all homes in Ottawa during the month of November 2023 was $628,900. That's an increase 1.4 per cent compared to the same time last year, but some communities and building types are seeing prices dip.

In Barrhaven, some new builds are now starting at $419,990.

"$400,000 is pretty cheap compared to the fact that we were almost at $600,000 last year when we signed so, that's pretty good," said Natascha Jansen-Poulin.

"I'm probably going to stay here for quite a while so it doesn't really matter to me too much, but I do hope prices go up so that my value goes up as well."

There are roughly 2,800 homes on the market in the capital as of the first week of December.

That level of supply is something realtors, homebuyers and sellers have not seen in the past few years, but it shouldn't come as a surprise.

"Some people think 'is that good or bad?' In 2019, there were 4,000 homes on the market. So when people say 'we have too much inventory', compared to what; compared to the heated days of COVID when properties were selling in the first five to seven days? Yeah, there is a lot more inventory in the market than there was back then," said Meyer.

"But generally speaking, we have about a four month supply on the market and that is a balanced market. We're just not used to that over the last couple of years."

Where home prices and sales go from there will largely depend on what the Bank of Canada has in store for the key lending rate. The next rate decision is scheduled for Jan. 24, 2024.

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