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Your Exclusive Real Estate Market Update

In May 2024, the Ottawa Real Estate Board (OREB) reported a total of 1,545 homes sold through the MLS® System, marking a 9.2% decrease compared to May 2023. This figure was 3.7% lower than the five-year average and 13.2% below the ten-year average for May. Year-to-date, home sales reached 5,673 units over the first five months of the year, reflecting a 5.2% increase from the same period in 2023.

OREB President Curtis Fillier noted that Ottawa's early spring market remained steady, with an increase in new listings indicating growing seller confidence. However, some sellers may have awaited the Bank of Canada's interest rate announcement before making decisions, as the first interest rate cut in four years occurred. Nevertheless, supply issues and high home prices persist as challenges despite positive economic indicators.

By the Numbers – Prices:

The MLS® Home Price Index (HPI) tracks price trends far more accurately than is possible using average or median price measures.

  • The overall MLS® HPI composite benchmark price was $651,300 in May 2024, a marginal gain of 1.2% from May 2023.

    • The benchmark price for single-family homes was $736,000, up 1.1% on a year-over-year basis in May.

    • By comparison, the benchmark price for a townhouse/row unit was $517,500, up 2.1% compared to a year earlier.

    • The benchmark apartment price was $425,000, up 2.0% from year-ago levels.

  • The average price of homes sold in May 2024 was $690,683 increasing 0.8% from May 2023. The more comprehensive year-to-date average price was $679,862, increasing by 1.8% from the first five months of 2023.

  • The dollar volume of all home sales in May 2024 was $1.06 billion, down 8.5% from the same month in 2023.

OREB cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Prices will vary from neighbourhood to neighbourhood.

By the Numbers – Inventory & New Listings

  • The number of new listings saw an increase of 26.2% from May 2023. There were 3,034 new residential listings in May 2024. New listings were 23.2% above the five-year average and 10.2% above the 10-year average for the month of May.

  • Active residential listings numbered 3,552 units on the market at the end of May 2024, a gain of 59.4% from May 2023. Active listings were 72.2% above the five-year average and 2.9% below the 10-year average for the month of May.

  • Months of inventory numbered 2.3 at the end of May 2024, up from 1.3 in May 2023. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity. 

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Spring 2024 Canadian Real Estate Market: Balanced Conditions Amid Rising Inventory and Cautious Buyers

Despite increasing inventory levels, many of Canada’s homebuyers have remained cautious this spring, leading to more balanced and less intense market conditions in the past month.

The latest report from the Canadian Real Estate Association (CREA) shows that home sales across Canadian MLS Systems decreased by 1.7% from March to April 2024. However, actual sales activity was 10.1% higher than in April of the previous year.

Meanwhile, newly listed homes saw a 2.8% increase in April 2024 compared to March. With slower sales and more new listings, the total number of homes on the market surged by 6.5%, reaching its highest point since just before the COVID-19 pandemic. This represents one of the largest monthly increases on record, second only to the market slowdown in early 2022.

James Mabey, Chair of CREA’s 2024-2025 Board of Directors, commented in the monthly report, "After a long hibernation, the spring market is now officially underway. The increase in listings is resulting in the most balanced market conditions we’ve seen at the national level since before the pandemic. Mortgage rates are still high, and it remains challenging for many to enter the market, but for those who can, it’s the first spring market in some time where they can shop around, take their time, and exercise some bargaining power. Given the demand, it's uncertain how long this will last."

With sales declining and new listings increasing in April, the national sales-to-new listings ratio dropped to 53.4%, slightly below the long-term average of 55%. By the end of April, there were 4.2 months of inventory nationwide, up from 3.9 months at the end of March. This is the highest level since the pandemic began and exceeds the long-term average of five months.

Shaun Cathcart, CREA’s Senior Economist, noted, "April 2023 saw a surge of buyers re-entering a market with new listings at 20-year lows, whereas this spring has been the opposite, with a healthier number of properties to choose from but less enthusiasm on the demand side."

The national average home price in April 2024 was $703,446, down 1.8% from April 2023. The National Composite MLS Home Price Index (HPI) remained unchanged from March to April, marking the third consecutive month of stable prices. Regionally, prices are mostly stable across the country, except in Calgary, Edmonton, and Saskatoon, where they have been steadily rising since the beginning of last year.


Source:https://blog.royallepage.ca

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Ottawa Real Estate Market: A Resilient Spring Amidst Changing Dynamics

In April 2024, Ottawa Real Estate Board (OREB) reported 1,456 homes sold via the MLS® System, marking an 8.9% increase from the same period in 2023. However, sales were slightly below both the five and ten-year averages for April.

Year-to-date figures showed a promising 11.5% increase in home sales compared to the same period in 2023. OREB President Curtis Fillier described the current market as typical for spring, noting a restored confidence among buyers and sellers. Sellers are more confident due to recent sales activity, leading to an uptick in listings, while buyers feel less pressure in the post-pandemic market and are taking their time to find suitable properties.

Fillier emphasized the importance of looking closely at sales details, noting changing buyer demographics and a shift towards townhomes becoming a seller's market due to shrinking supply. Single-family homes remain the most active segment, influencing average sale prices.

Regarding prices, the MLS® Home Price Index (HPI) indicated marginal gains, with the overall benchmark price reaching $643,700 in April 2024. Single-family homes saw a 1.6% increase in benchmark price, while townhouses and apartments also experienced slight increases.

New listings surged by 40.5% compared to April 2023, with active listings increasing by 36.6%. However, months of inventory remained relatively stable, suggesting sustained market activity.

 
 
 
 
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Navigating the Pros and Cons of Adjustable-Rate Mortgages: A Comprehensive Guide

Adjustable-rate mortgages (ARMs) present borrowers with a distinctive opportunity to leverage fluctuating interest rates, offering flexibility and potential cost savings over the loan's duration. Nevertheless, ARMs also entail inherent risks and uncertainties that borrowers should carefully weigh before opting for this mortgage type. This article delves into the advantages and disadvantages of adjustable-rate mortgages, aiding you in discerning whether an ARM suits your homeownership requirements.

Understanding Adjustable-Rate Mortgages (ARMs)

An adjustable-rate mortgage (ARM) is a home loan type wherein the interest rate remains unfixed for the loan's entirety. Instead, it fluctuates periodically based on changes in an index, such as the prime rate or the London Interbank Offered Rate (LIBOR). Typically, ARMs commence with an initial fixed-rate period, succeeded by adjustable-rate intervals where the interest rate can vary annually or at specified intervals.

The Pros of Adjustable-Rate Mortgages

  • Lower Initial Interest Rates: ARMs often initiate with lower interest rates compared to fixed-rate mortgages, appealing to borrowers seeking reduced monthly payments and potential savings during the initial fixed-rate phase.

  • Potential for Lower Payments: Should interest rates decrease or remain stable, ARM borrowers may experience decreased monthly payments during adjustable-rate periods, enhancing affordability and cash flow flexibility.

  • Short-Term Ownership Benefits: ARMs can prove advantageous for borrowers planning to sell or refinance their homes within a few years, allowing them to capitalize on the lower initial interest rates while avoiding prolonged exposure to interest rate fluctuations.

  • Rate Caps and Limits: Most ARMs incorporate rate caps and limits, constraining the extent to which the interest rate can fluctuate during each adjustment period and throughout the loan's lifespan. This provision offers borrowers a level of protection against significant rate changes.

The Cons of Adjustable-Rate Mortgages

  • Interest Rate Risk: The primary drawback of ARMs lies in the uncertainty surrounding future interest rate movements. If interest rates surge substantially during the adjustable-rate periods, borrowers may face heightened monthly payments and increased financial strain.

  • Payment Shock: Swift increases in interest rates can result in payment shock for ARM borrowers, causing a sudden and substantial rise in monthly mortgage payments that may prove challenging to afford, particularly for borrowers with fixed incomes.

  • Budgeting Challenges: The variable nature of ARM payments can pose challenges in budgeting and financial planning, necessitating borrowers to accommodate potential changes in housing expenses over time.

  • Long-Term Costs: While ARMs may offer lower initial interest rates, borrowers holding onto their mortgages for extended durations might end up paying more in interest over the loan's lifespan if interest rates soar during adjustable-rate periods.

Is an ARM Right for You?

Determining whether an adjustable-rate mortgage aligns with your homeownership needs hinges on various factors, including your financial situation, risk tolerance, and future plans. Reflect on the following questions:

  1. Are you comfortable with the possibility of fluctuating interest rates and payments?

  2. Do you intend to reside in your home for an extended period or consider selling/refinancing within a few years?

  3. How do prevailing interest rate trends and economic conditions influence your decision?

  4. Have you thoroughly assessed and comprehended the terms, features, and risks associated with the ARM product?

Ultimately, reaching out to a qualified mortgage advisor or financial planner can provide invaluable support in assessing your options and deciding whether an ARM aligns with your financial goals and preferences. Don't hesitate to contact us for a list of our trusted mortgage advisors and financial planners who can assist you further.

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