Steady Ground

In October, Ottawa’s housing market strengthened as sales increased to match the 10-year average, while new listings declined, improving market balance. Prices dipped slightly but remained stable, as did rents. In the new construction segment, sales were below typical levels, housing starts held steady, and completions were elevated. Ontario’s mortgage arrears surged to 49% above the 10-year average, though they remained low nationally.

Sales in the Ottawa Metro area spiked in October, both nominally and after seasonal adjustment. A total of 1,179 sales were recorded—13% higher than last month, up 46% year-over-year, and just 1% below the 10-year average. Sales typically decline from May through December, making this increase unusual.

New listing activity declined in October, with 2,089 new listings recorded—a monthly drop of 11%, but up 10% year-over-year and 17% above the 10-year average. New listings typically decrease between September and December.

Active inventory declined in October but increased after seasonal adjustment. It was down 5% monthly, up 9% annually, and 7% above the 10-year average, reaching 3,354 units. Active inventory typically decreases from May to December.

The market balance indicator, Months of Inventory, strengthened in October, standing 13% below the 10-year average. The market balance usually weakens between October and January.

The Sales-to-New Listings ratio, another market balance indicator, also strengthened in October, though it was 15% below the 10-year average and typically weakens from September to December. Overall, Ottawa’s real estate is a balanced market.

Ottawa real estate prices declined slightly in October, with the benchmark price—reflecting a typical property—falling by 0.5% from the previous month to $639,500. Prices were stable year-over-year and 11-13% below their 2022 peaks. The benchmark price has remained largely unchanged in October over the past three years.

The average rent for one- and two-bedroom units in the Ottawa Metro area dipped slightly in September to $2,286. It matched last year’s value and was 4.5% higher than in 2022. Annual rent price increase continues to gradually decline suggesting weakening of the rental market.

New construction sales in September were 23% below the 6-year average. Over the past twelve months, 3,313 units were sold, 27% below the historical average.

The median price of new construction single-family units reached $925,000 in September, up 5.1% from the previous month, down 2% year-over-year, and 11% below the peak. Prices have remained relatively stable over the past two years.

Housing starts surged in September, exceeding the 10-year average by 47%, driven largely by apartment units. Over the past twelve months, construction began on 11,269 units, 3% above the historical average.

Housing completions in September were 3% above the 10-year average. Over the past 12 months, 11,534 units were completed in the Ottawa Metro area, a 20% increase over the historical average.

An increase in the bond market’s inflation expectations and a 0.5% interest rate cut by the Bank of Canada led to a convergence in the mortgage rates in October. The lowest 5-year fixed mortgage rate increased by 0.15% to 4.09%, while the lowest 5-year variable mortgage rate declined by 0.55% to 4.75%. The gap between those two shrunk to 0.66%.

The decline in real estate prices had little impact on housing affordability due to an increase in fixed mortgage rates. Covering mortgage payments on a newly purchased property in Ottawa Metro still requires 33% of a typical household’s income, unchanged from the previous month.

Ontario’s unemployment rate fell from 7.1% to 6.9% in September, reflecting a 15% increase compared to the previous year and 3% above the 10-year average. Nationally, the unemployment rate decreased from 6.6% to 6.5%, 2% below the 10-year average.

Ontario’s mortgage arrears rate rose from 0.14% to 0.16% in July, a 78% increase from the previous year and 49% above the 10-year average. Nationally, the mortgage arrears rate climbed from 0.19% to 0.20%, marking a 33% increase from the previous year but still 11% below the 10-year average.