Holding the Line

The Ottawa Metro housing market started the year with stable sales and a rise in new listings, though overall inventory remained steady. Price trends were mixed, with resale values edging up while new construction prices declined. Lower rents and mortgage rates helped improve affordability, easing some financial pressure on buyers and renters. Meanwhile, construction activity remained steady, completions surged, and a strengthening labour market supported economic stability. With mortgage arrears holding steady, the market continued to show resilience heading into the year.

Sales in the Ottawa Metro area remained largely unchanged in January, which is typical for this time of year. A total of 617 sales were recorded, 1% higher than the previous month, 2% lower year-over-year, and 6% below the 10-year average. Sales typically increase from January through May.

New listings rose in January to 1,359, marking a 125% monthly increase. They were 7% higher year-over-year and 12% above the 10-year average. Listings typically increase from January through May.

Active inventory increased to 3,312 units in January, reflecting a 3% monthly rise, a 67% year-over-year increase, and standing 50% above the 10-year average. Inventory typically increases from January through May.

The market balance indicator, Months of Inventory, slightly weakened in January, standing 46% above the 10-year average. The market balance typically strengthens between January and May.

Another market balance indicator, the Sales-to-New Listings ratio, also weakened in January, falling 20% below the 10-year average. This ratio usually strengthens between January and June.

Real estate prices edged up in January, with the benchmark price, representing a typical property, rising 0.6% monthly to $649,900. Prices were 5-6% higher year-over-year but remained 10-13% below their 2022 peaks.

In December, the average rent for one- and two-bedroom units in the Ottawa Metro area declined slightly to $2,248, down 0.5% from the previous month and 1.8% year-over-year.

New construction sales in December were 4% above the six-year average. Over the past 12 months, 3,742 units were sold, 18% below the historical average.

The median price of newly built single-family homes dropped to $917,500 in December, reflecting a 1.6% monthly decline, a 6% annual decrease, and sitting 12% below the peak.

Housing starts in December were in line with historical trends, coming in 5% below the 10-year average. Over the past 12 months, construction began on 11,549 units, 2% above the historical average.

Housing completions surged in November to 93% above the 10-year average. Over the past 12 months, 12,822 units were completed in the Ottawa Metro area, 29% higher than the historical average. This was also the second-highest level in the past decade.

In January, the lowest 5-year fixed mortgage rate fell 0.17 percentage points to 3.97%, while the lowest 5-year variable rate dropped 0.25 percentage points to 4.10%, following a 0.25% rate cut by the Bank of Canada. The gap between the two narrowed to 0.13 percentage points.

Housing affordability in the Ottawa Metro area improved slightly in January, supported by lower borrowing costs. Mortgage payments on a newly purchased property now require 33% of a typical household’s income, down from 34% in the previous month.

Ontario’s unemployment rate fell to 7.5% in December, marking a 19% annual increase and sitting 12% above the 10-year average. Nationally, the rate declined to 6.7%, 1% above the 10-year norm.

Ontario’s mortgage arrears rate stayed at 0.17% in October, up 55% year-over-year and 59% above the 10-year average. Nationally, the rate rose to 0.21%, a 24% annual increase, but remained 6% below the 10-year average.