What does next year have in store for Ottawa real estate listings?
We recently sat down with Paul Rushforth to discuss 2024 housing market predictions. He shared insights, trends, challenges and opportunities. Whether you’re a buyer, seller, or just keen on staying informed, Paul’s expertise and must-know advice will help us all navigate the year ahead.
Ready to dive into the details that matter?
1. What big surprises were you shocked to see in 2023 regarding real estate?
Before delving into the dynamics of 2023, it’s crucial to remember just how unique the prior years were. Early in 2022, we had an unprecedented surge with homes selling for $100,000 to $200,000 over asking prices. And, either because the market was so crazy or due to COVID-19, there was no need for open houses.
But this wasn’t normal or sustainable.
As a result, the Ottawa real estate market in the fall of 2022 was very tough, and 2023 followed suit. We saw interest rates start to rise, and they rose very quickly. Unfortunately, this meant first-time home buyers were taken entirely out of the market, and existing home sales declined because they couldn’t afford to buy. (That represents about 30% to 35% of buyers in Ottawa.) We also found the investment market really dried up in 2023. How can you be cash flow positive on an investment with a 6% interest rate? You just can’t. (That’s, maybe, another 15% of our buyers. So 50% of our market was gone.)
Additionally, housing prices took a hit in 2023. When all is said and done this year, our average home price will be in negative territory for the first time since 1996. Some economists have said it will go up 7%, 9% or 4%, and that’s entirely wrong. We finished last year with an average price of $691,000, and we’ll end around the $ 660k-$665k mark this year. To me, that’s a pretty decent drop.
Of course, in 2021 and 2022, people saw equity in their homes soar. The Ottawa housing market went insane, and now we’ve come back to reality. I like to use 2019 as a barometer of what a normal market is, and 2023 was very similar to 2019.
We’ve now returned to a normal real estate market with regular sales activity.
2. What kind of real estate market do you see in 2024?
Looking at the housing market forecast for 2024, I believe we are going to be in a balanced market.
A balanced market is four to six months of inventory, and we’re currently hovering around three and a half to four months. (In other words, if no other home hit the market, it would take about four months to clear all the inventory off the market.) This isn’t surprising; we’re usually in a healthy, balanced market during normal market conditions here in Ottawa.
That said, pockets of the city will remain in buyers’ or sellers’ markets. Older areas without new construction generally tend towards a seller’s market and areas with lots of home building lean towards a buyer’s market. But, for Ottawa as a whole, 2024 will be a balanced market.
3. How could changes in interest rates affect the Ottawa market in 2024?
We’re eagerly waiting to see what will happen with interest rates. The last two announcements they’ve kept them the same, which is great, but we need to see some drops. Without rate drops, it looks like 2024 will be very flat, just like 2023.
I think they’re going to remain very conservative, and we’ll see rate holds until about May. I’m interested in seeing how that affects our spring market (from January 15th to mid-May). And, furthermore, what’s that going to do to our summer market? That’s cottage country and vacation time in Ottawa, and usually a slow time for housing markets. But if mortgage rates start dropping in late spring or early summer, we might see a really strong summer market, which we haven’t seen in a while. That energy could continue well into fall.
I wouldn’t be surprised if some of the rate drops are very aggressive. We might get a half-a-point drop, or rates could come down 1% by the end of next year. And really, I hope that’s the case because then we’re into the high threes or low fours for a mortgage, which is palatable. And that will help first-time home buyers get back in the market.
We’re waiting with bated breath to see how it all unfolds and are ready for whatever this year might throw our way.
Check out our mortgage rate calculator to help you stay updated on current rates.
4. How will the 2024 real estate market compare to 2023?
The overall market outlook for 2024 is expected to be similar to that for 2023. Unless we can get an interest rate drop—or numerous rate drops—we will see a very flat market again. The caveat is if rates drop quickly. If that happens, we might teeter back towards a seller’s market.
5. What kind of property will make the biggest impact in 2024?
First-time home buyer product is what’s going to take off in 2024. While there’s still an appetite for big singles, most people are looking for smaller, more compact and affordable properties. That’s where builders should be focusing.
We want to get first-time homebuyers and investors back into the housing market. That’s the biggest thing that will spur this market; getting buyers into townhomes, terrace homes, and small singles will allow people to move up and keep this market going.
Again, this entirely hinges on interest rates. We need to get the rates down and make properties more accessible to first-time home buyers and investors.
6. Are you seeing any changes in price or popularity for specific Ottawa neighbourhoods?
Affordability usually steers folks towards the outskirts of Ottawa, but with rising mortgage rates, we’ve seen a significant slowdown in the country and suburbia. It’s where many first-time homeowners and young families would like to buy but can’t.
There are just too many variables in the market right now, but if the interest rates drop, like I suspect they will, it could be a game-changer. I foresee a comeback in many suburbs, from Kanata, Stittsville and Barrhaven to Orleans. They’re some of Ottawa’s top neighbourhoods, and I think they’ll all rebound once the rates come down.
I’m keeping my eye on the west and the south. They’ve always been our strongest areas and are very young communities. But a lot of the areas to the west are more mature, with fewer new homes (except for Kanata and Barrhaven, which have more housing development).
The south is a wildcard right now. Places like Riverside South and Findlay Creek usually move fast. They are loaded with townhouses, terrace homes, and small singles and usually attract young families and first-time buyers. But currently, there’s more inventory than usual, and real estate activity in these up-and-coming Ottawa neighbourhoods is slower than it should be. If we can get rate drops, those areas are going to boom because they have the most new home building and the most product.
7. What does the Ottawa real estate market look like for investors in 2024?
Until we see a drop in rates, it’s going to continue to be tough for traditional real estate investors to get into the market; it doesn’t make cash flow sense.
The investors who will stay in the market are those who can buy properties with multiple doors under a single roof, albeit at a higher price point. This approach will undoubtedly yield positive cash flow in the long run.
Another interesting niche of investors in 2024 will be older folks who anticipate downsizing but aren’t quite ready to make the move. This demographic likely has a mortgage-free primary residence and is looking to acquire a condo for future use. They’re okay with renting out the unit and being a little cash flow-negative for a while. It’s a long-term investment for them—they might pay $400k now but know it’ll be worth $600k soon. They’re buying on speculation of investment equity.
8. Do you see any trends within demographics?
Due to the housing affordability crisis, would-be homebuyers in Ottawa are exploring rental options. Additionally, new homeowners are taking themselves out of homeownership and moving back in with mom and dad. And this is not about choice but a result of financial strain. With the mortgage rates where they are, a growing number of people just can’t afford it.
Additionally, there’s a segment of the market that often doesn’t get mentioned much—the baby boomers. Our elders are the biggest cohort other than millennials, and they’re faced with very unique challenges. The dream of selling a home for a decent profit and comfortably moving into a retirement residence is drying up. With average prices dipping due to interest rates, they’re selling their houses for much less than they’re hoping for. On top of that, retirement residence costs have shot up, throwing a wrench into plans easing into their golden years with financial security.
It’s sad. Behind these trends, people are struggling. The interest rate hikes are directly impacting individuals and families. The intention might be to curb inflation and slow the housing market, but the collateral damage is real.
9. Advice for buyers in 2024?
Here’s what you need to keep in mind: interest rates are bound to come down, and (even though efforts are underway to cut the red tape for builders) we currently don’t have enough inventory to meet housing demand. Furthermore, the foreign buyers ban is coming to the end of its term at the end of 2024 (it’s possible the government could take that away). If these things happen, we will see a crazy market again.
As I see it, we’re currently looking at a window of about six to twelve months, maybe a bit more, before things potentially skyrocket. If you can stomach the high interest rates, you’re getting a property for a really good deal right now. I’ve seen it happen before, and trust me, you don’t want to be that person kicking themselves at the end of 2024, wishing they had listened to the advice before housing market activity picked up.
Now, listen, I understand. Not everyone can jump in right now. I get that. They can’t stomach the rates and Ottawa home prices. But if you can, I strongly suggest you get in sooner than later.
10. Advice for sellers in 2024?
Sellers: In 2024, selling success will require getting back to basics, strategic timing and accurate pricing.
Pre-COVID-19 rules have returned! First impressions matter, and ugly homes won’t sell unless they’re upgraded. Simple stuff like decluttering, making your home smell good, a fresh coat of paint, and upgraded light fixtures can work wonders. Before you dive into major upgrades like a new kitchen or bathroom, speak with a Paul Rushforth agent because many of those things won’t add the value you need to sell your home.
Timing also matters. Every neighbourhood will have its own timeline—some areas will be ripe for selling in 2024, while others will benefit from a more cautious approach. This might sound contradictory, but it’s really more about understanding each community’s specific dynamics. If your house is a standout gem, sure, you can make a move now. But a waiting game might be in your best interest if you’re competing with seven other homes that shine a bit brighter.
And you always need an accurate, well-researched pricing assessment. Without question, this holds true for any year you hope to sell. When we say your home is valued at $425,000, that’s not an arbitrary figure. We’re confident because we’ve done the work. We know exactly how much Ottawa homes are selling for and have up-to-the-minute information about market trends in your area. (If another realtor comes in the door and says, “Oh, yeah, you’re at $475k,” ask for the facts! We all know what happens when you price a home wrong: it sits and sits. Then people start to wonder what’s wrong with it, and it eventually sells for far less than it’s worth.)
Let’s have a conversation about your home; we’re here to guide you based on the facts and metrics in your specific area.
11. Why work with Paul Rushforth?
Our recommendation: don’t sell your own home without an agent. When we go into properties, we win listings because people are amazed at what we know. And it’s not that we’re any better. We’re just more prepared and more educated than the average agent.
In an era where macro views dominate and misinformation abounds, you need a team that takes a micro approach. We take the time to delve deep into your specific area, meticulously studying market trends, housing price indices, and local dynamics to provide you with a precise comparative market analysis (CMA).
And we’ve sold almost 9000 homes over the years. So, we don’t need a staging degree when it comes to things like decorating. Our agents are excellent at it! Plus, we have the best photographer and videographer in the city.
Choose the Right Real Estate Team in 2024!
Nobody in the business knows Ottawa market conditions, timing, and pricing better than the Paul Rushforth team. Whether you’re ready to buy, sell, or invest, we have the expertise and dedication to deliver results.
Talk To Us About Your 2024 Ottawa Real Estate Needs: Buyer / Seller
Paul Rushforth Real Estate is a member of the Ottawa Real Estate Board, the Ontario Real Estate Association, and the Canadian Real Estate Association.