Market Outlook for 2013, is it as bad as they say!?

Well its no secret that there are some questions to be answered when looking at the Canadian Housing Market. The media sure does a good enough job of letting everyone know that. You’ve heard it before but I’m going to say it again, DON’T BELIEVE EVERYTHING YOU SEE ON TV! Good news just doesn’t sell. I tend to trust the predictions of those that have consistently proven themselves in the past, CMHC(Canadian Mortgage and Housing Corporation). If you read back to my post this time last year, and their predictions you’ll see they were pretty bang on(we saw a 2.3% increase). I recently sat in on a conference with CMHC for their Market Update for 2013 and this year is going to be much of the same. A slight increase with the rate of inflation, but overall the market here in Ottawa will remain level. All of you sitting back waiting to purchase hoping for prices to fall, best of luck to ya. Here are some points of interest that I noted during the Conference.

Ottawa Market

• Ottawa median household income remained the highest amongst large cities in Canada coming in just shy of 100k/year, with average home price at $350k. To put that in perspective, Vancouver with a much higher avg home price came in closer to 60k/year!
• Ottawa saw a market stall due to the uncertainty of employment with government cuts but remember they are only cutting 1% of job force. Not a big deal. Infact, Ottawa saw a 3% employment growth attributed to service sectors and public admin. Unemployment rate for 2013 is looking to stay about the same as 2012.
• The last large decline in our market was in 95-96 where there were MANY more job cuts than we are seeing now. Sale prices only went down 2.4% then, and interest rates were at 9% and not historically low like they are now. Just think about that. More jobs, less interest, sales shouldn’t be affected all that much.
• Ottawa is creating jobs! The LRT is expected to create approx. 20,000 jobs, the Landsdowne project will create a bundle and The Rideau Center will be doing a 250million dollar reno!
• We are currently sitting in a balanced market with a sales to listing ratio of 40-60%. If patterns stay the same we should be seeing some good growth come 2014.
• We expect a slight decline in sales for the first and second quarter of this year and they are expected to turn around for the 3rd and 4th.
• In 2012 Stittsville and Southeast Ottawa saw the highest increase in sales volume while Southeast saw the highest increase in price.
• New home construction in Ottawa hit over 6000 units in 2012(6026) and is expected to drop slightly for 2013 at approx. 5200. Breakdown of those units being built will be the same with 25% single homes, 25% rows and semis, and 50% apartments.
• Cheaper to get resale still! Keeps you closer to the downtown core as well. 2012 saw new home prices for singles hitting approx. 23% higher than resale homes!!!

So all in all Ottawa, we will be just fine. The worst thing you can do is just sit on your hands and do nothing.

Canadian Economy

• GDP growth will be driven by business investment
• Housing Market expected to moderate
• Week demand globally for our exports will restrain growth slightly
• Interest rates to remain at historic lows as the states announced they shouldn’t be changing until 2015.

Global Economy

• European GDP Decline
• Italy, Spain, Portugal, Greece, still not out of the danger zone yet
• 11.7% unemployment rate
• Germany starting to show some signs of growth
• Good news for Canada is that the majority of our exports go to the states, then some to China, Japan, South Korea, and only approx. 6% go to European Countries.
• US Economy is starting to recover even though they showed a slight decline in the 4th quarter attributed to the scare of the “fiscal Cliff”.

Well there you have it. If you have any questions at anytime about our current market conditions, whether you should be buying or selling at this time. Please don’t hesitate to ask.

Andrew Miller

• The last large decline in our market was in 95-96 where there were MANY more job cuts than we are seeing now. Sale prices only went down 2.4% then, and interest rates were at 9% and not historically low like they are now. Just think about that. More jobs, less interest, sales shouldn’t be affected all that much.