Buyers waiting for a Bank of Canada announcement on interest rates may have contributed to a slower May 2024 resale market, according to the Ottawa Real Estate Board (OREB).
Realtors sold a total of 1,545 homes last month through the board’s Multiple Listing Service (MLS). That was a drop of 9.2 per cent from the same month last year and 13.2 per cent below the 10-year average for May.
It was also the first time in six months that local resale transactions did not increase over the previous year. Those increases had come after a prolonged downturn that started in the spring of 2022 and continued through the rest of the year and 2023, seriously hobbling the real estate market here and in other centres across the country.
MORE: Ottawa’s 2022 resale market a dismal affair
“Ottawa’s early spring market was unsurprisingly steady,” said OREB president Curtis Fillier in a statement. “The increase in new listings indicates that sellers are more confident that properties are moving as market activity picks up. Some buyers, however, were likely waiting for the Bank of Canada’s interest rate announcement to see if it would affect their purchasing power.”
The central bank’s announcement on June 5 reduced its key interest rate, which had been elevated to fight inflation, from five to 4.75 per cent. It was the first reduction since March 2020, and the five major banks responded by cutting their prime rates from 7.2 to 6.95 per cent.
“The first interest rate cut in four years is good news,” said Fillier, “but expectations still need to be managed as long as supply issues and high home prices persist.”
Fillier also took a swipe at the City of Ottawa for increasing development charges — the fee levied on each new-build home to help pay for municipal infrastructure — calling it a “counterproductive move” that will do nothing to support increased home building and affordability.
Prices, listings & inventory
The benchmark price for resale homes last month rose 1.1 to 2.1 per cent, depending on housing type, compared to the same month a year ago.
The benchmark price for single-family homes was $736,000, for townhomes it was $517,500 and condos went for $425,000.
OREB says the benchmark price, which is different from the average or median price, is a more accurate way to track trends.
In keeping with the trend of the past few months, new listings jumped more than 26 per cent from the same month last year.
There were 2.3 months of inventory at the end of May 2024, up from 1.3 in May 2023. The number of months of inventory is how long it would take to sell the current supply of homes at the current rate of sales activity.
