Ottawa housing market to cool in 2022 but prices will rise: CMHC
A new home is displayed for sale in a new housing development in Ottawa on Tuesday, July 14, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Ottawa's hot real estate market is expected to cool down this year due to rising interest rates, but prices will likely continue to rise.
Canada Mortgage and Housing Corporation says although supply constraints could limit the number of home sales in the capital this year, the market will remain "tight enough" to drive up prices for homes.
"The Ottawa market should move away from overheating as a result of the decrease in sales and an increase in listings," CMHC said. "Nevertheless, the market should remain tight enough to maintain some upward pressure on prices."
The CMHC says higher mortgage rates will continue to slow demand this year and next, but sales will remain high form a historical standpoint.
The corporation’s Housing Market Outlook predicts between 18,700 and 20,500 homes will be sold in Ottawa this year, down from 20,625 in 2021. The average price of homes sold will range from $720,000 to $750,000.
"Demand for existing homes should remain strong, but supply constraints could limit the number of sales," CMHC says. "In the second half of the year, rising mortgage rates and declining employment may also lead to reduced sales. Overall, sales should decrease in 2022."
Canada Mortgage and Housing Corp. says an end to pandemic-related restrictions and a return to pre-pandemic life would reduce the ability of households to finance home purchases and lower housing demand.
"This would then position sales at the lower end of our forecast, which is 18,700 homes sold.”
Canada Mortgage and Housing says the average price of a home sold in Ottawa could hit $750,000 in 2022, up from $648,099 in 2021.
Although housing inventory remains historically low in Ottawa, the CMHC expects housing starts to decrease slightly this year before rising in 2023 and 2024.
“The decrease expected this year is a short-term phenomenon amplified by the limited availability of resources in the construction sector.”
Ottawa Real Estate Board said last month that Ottawa’s real estate market had about two weeks’ worth of housing inventory. A balanced market has four months of inventory.
Canada Mortgage and Housing Corp. says rising mortgage rates, limited supply and slower employment growth will slow the resale market in Gatineau, Que. this year.
However, with supply at a historic low, "sellers market conditions will likely persist through 2022."
"This will keep upward pressure on the average price," CMHC said. "Forecasted growth will be high compared to the area's historical increases, but will remain below 2020 and 2021 levels."
CMHC estimates between 5,300 and 6,100 homes will be sold in Gatineau this year, down from 6,033 in 2021. The average price for a home will be $452,000 to $488,000.