2023 Ottawa Real Estate Market Snapshot:

In 2023, there were 4276 sales of detached single family homes on the MLS. Of this total 335 sold between  $450,000.00 and $599,000.00 (9% of all sales), 1241 were between $600,000.00 and $749,000.00 (29% of all sales), 1669 were between $750,000.00 and $999,000.00 (39% of all sales) and 981 were over $1,000,000.00 (23% of all sales).

The average price of a detached residential home was $704,900.00., as of December 31st 2023, up 2.7% on a year over year basis.

By comparison, the benchmark price for a townhouse was $481,100.00, up 4.2% compared to a year earlier. This includes condominium row houses.

Current Market Conditions & Their Influence

The year started with an average selling price for detached single homes of $655,839.00 and ended with an average selling price of $704,900.00, a 2.7% yearly increase. Although it will take some time to see prices reaching the height of Spring 2022, it will happen. The debate is when.

Forecasters are predicting that 2024 will see interest rate decreases of between 0.5-1.5% with home prices increasing between 3% to 8%. by year’s end.

Whether or not the interest rates drop, the current price stability and lack of supply, combined with Ottawa’s low unemployment rate and high average income should be enough to spur buyers into purchasing property.

Calgary’s market is booming even at current interest rates. Calgary and Ottawa are very similar cities in terms of population, education, average incomes and age. They are also similar in housing prices which is what is drawing people in from the more expensive cities like Vancouver and Toronto.

Calgary’s average price last year was up 10.7% at the end of 2023 to $663,500. They are anticipating an 8% increase in 2024 bringing those values up to $716,580.00. 

The same could happen in Ottawa as our market restarts in 2024. A  3-8% price increase here would raise home prices from the current average of $704,900.00 to between $726,027.00 and $761,292.00.

Royal Lepage is predicting Ottawa home prices to rise by 4.5% or $736,620.00, an increase of $37,120.00. 

With falling rates, more buyers will enter the market. This upswing in activity, accompanied by population growth through immigration and younger Ottawans starting their families, will see the  demand for single family detached homes increase. 

As these Buyers purchase, they will quickly absorb the current inventory thereby lowering the days on market and driving up prices. Higher selling prices should encourage homeowners sitting on the side lines to sell. Many will be downsizing, selling larger homes to buy a condominium or smaller townhouse. This renewed growth in supply will encourage Buyers looking for larger homes to enter the market as fresh, well appointed homes in good neighbourhoods become available again. 

We have experienced an increase in calls from our clients asking about market conditions, as they consider selling in the next few months. We are also experiencing an increase in activity on the homes that we currently have on the market. We are also working with more motivated Buyers ready to place an offer. 

Our network of building inspectors and mortgage specialists are telling us that they are also experiencing an increase in activity..

With an influx of Buyers deciding that market conditions work for them, the competition for the existing, limited inventory in Metro Ottawa is increasing. For those looking for a home priced under $700,000.00, the supply is limited at best and unavailable in the majority of neighbourhoods.  City wide there are less than 120 homes currently offered for sale under $700,000.00. 

As first time buyers purchase their starter home, it allows move-up Buyers to buy the larger home that they have been contemplating. That allows those downsizing to buy the condo or smaller homes they have been considering. This will re-energize the home buying/selling cycle that slowed to a crawl in the second half of 2023.. 

With the inventory of available homes at a low level, an increase in activity will quickly eat into supply. Without a healthy influx of new listings we could get back into the same cycle as we did in 2022 with bidding wars potentially becoming more common.

Forecasting the Real Estate Market for 2024

We think Ottawa’s real estate market is one interest rate cut away from a significant increase in sales activity.

We still have a lack of supply of market-ready, well priced homes in high demand neighbourhoods. Homes listed under $700,000.00 are now harder to find as this more affordable segment of the market has rapidly been absorbed.

Due to the low level of homes under $700,000.00 currently listed, we anticipate that this price point will be tight to non-existent in most neighbourhoods. With prices rising on the lower end of the market, we will most likely return to $800,000.00 as the starting point for a good detached single family home. 

While the supply of homes has remained steady (see graph below), an increase in activity will alter that statistic, triggering an increase in prices. If the rate of sale increases by as much as 30% with our current, low supply, the days on market will transition Ottawa into a Seller’s market. While some parts of the city offer great buying opportunities, specific neighbourhoods have firmly remained Sellers’ markets, given the localized lack of supply and high demand.