The new millionaires of Ottawa: A dispiriting reality for homebuyers
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Overall, home prices averaged $ 734,000 for the first six months of 2021 – an increase of nearly 52 percent over the same period in 2019.
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August 30, 2021 • 59 minutes ago • Read for 3 minutes • Join the conversation 
Manotick is at the epicenter of a trend that has seen a five-fold increase in real estate areas where the average home sells for more than $ 1 million since 2019. This home on 1071 River Rd. Was listed for $ 3 million. jpg
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It happened so quickly that there was hardly any time to adjust. As recently as May 2019, average house prices in Ottawa were below $ 500,000, up just over six percent year-on-year. Earlier this year, prices peaked at nearly $ 760,000 after rising 36 percent.
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But the average only tells you so much. Over the past two years, Ottawa’s real estate markets have changed profoundly, making home ownership inaccessible in many corners of the city and turning thousands of homeowners into paper millionaires.
Using data from the Ottawa Real Estate Board, this newspaper analyzed the home sales that closed in the first six months of this year and compared them to the same period in 2019.
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Overall, home prices averaged $ 734,000 that year – up nearly 52 percent from the first six months of 2019. That translates into an average lottery-like profit of $ 250,000 for each seller.
Selling million dollar real estate became almost routine. From January through June, 59 property areas (out of 275 in the Ottawa area) had average resale prices in excess of $ 1 million. In the same pre-pandemic period, there were only $ 12 million enclaves, including well-known neighborhoods like Rockcliffe Park, Glebe, Rocky Point, and Cedarhill-Orchard Estates.
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The epicenter of the new real estate wealth is Manotick, where several acres of land and villas stretch in almost every direction from the island. No fewer than four property areas adjacent to Manotick have joined the multi-million dollar housing club in the past two years, most notably Manotick South, where average prices rose 179 percent from $ 567,000 two years ago to $ 1.6 million – what the recent, high-end development.
Yet Manotick is just one of a handful of rural and semi-rural clusters that has seen a remarkable surge in popularity. Neighborhoods that recently joined the Millionaires Club include: Huntley (northwest of Kanata), Cumberland West, Greely, and the rural area southeast of Stittsville.
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“People are realizing that they no longer have to be near the city center,” says Paul Rushforth, owner of the real estate company of the same name. “We also see a lot of people coming from Toronto, where paying a million dollars for a house is no big deal.”
The initial trigger for the price spike in Ottawa was a shortage of inventory as new construction failed to keep pace with the city’s population growth.
The pandemic added another boost as panicked buyers, aided by historically low interest rates, outbid each other to buy larger homes on lots that offered space and a break from the crowded downtown streets.
“The leading indicators are all there to support the purchase,” says Bill Meyer, agent for the Tulip team at Remax Hallmark Realty Group. “There is job stability and mortgages are cheap. The problem is the offer – there are not enough offers. “
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Who is buying all of this million dollar real estate? Agents say these are a wide range of people from tech workers who exercise stock options to professional couples who have made big capital gains on smaller properties and can afford to trade. Apparently there is a lot of money and credit capacity in the capital region.
While prices have increased the fastest in the suburbs, the increases have also been noteworthy in some inner cities. For example, in Ottawa East – the area south of the Queensway between the Rideau Canal and the Rideau River – average prices rose 56 percent in the southern section of the rectangle in 2019 and nearly 40 percent in the northern section. All three Ottawa East real estate areas currently sell an average of more than $ 1 million.
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The wealthiest neighborhood remains Rockcliffe Park, where the average resale exceeded $ 3 million in the first half of this year – 33 percent more than the same period in 2019. That was below average price growth for the Ottawa area, but still represented a two year capital gain of more than three quarters of a million dollars.
Looking at the 59 richest property areas overall, the average two-year capital gain was nearly $ 390,000 as prices climbed to $ 1.2 million for each of the 848 homes sold.
The average price for the other 7,800+ homes that changed hands during that period was $ 684,000 – a profit of nearly $ 237,000.
This has been an unexpected blessing for sellers. For potential first-time home buyers, this is the daunting reality of Ottawa’s real estate market during the pandemic.
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COVID and low I rates have created many new million dollar enclaves in Ottawa. From January through June, 59 of 275 property areas had average resale prices in excess of $ 1 million, compared with just 12 (in blue) in the same year 2 years ago. I removed areas with less than 5 sales. Dates: @ OREB1 pic.twitter.com/lNLn9aZLAz
– James Bagnall (@ JamesBagnall1) August 27, 2021
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