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If you have been keeping track of the news, you have probably noticed a slight trend in how the real estate market is getting reported. Things sound scary: rising interest rates, talk of a “housing crisis,” and the dreaded recession talk—it’s enough to make anyone log off.
However, looking at the history of Ottawa real estate, the Chell Team thinks the outlook is quite a bit more positive.
We’re still following the four phases of real estate
The real estate market typically follows four phases, repeating itself roughly every 20 years. Looking back at historic trends, we can pinpoint these phases.
The first phase (or the last) is recovery. This is when the public feels a bit down about the economic outlook. It usually occurs right after a recession and can be hard to define. New constructions are stagnant, and vacancy rates are low, but there is a glimmer of hope.
Many experts say this is when the economy feels “normal.” Construction is booming, and unemployment is going down. Expansion can be seen in the middle of a strong seller’s market in most cases: the housing supply and housing demand are rising.
Housing supply has begun to exceed demand, creating higher vacancy rates, and home prices decline. This is when the market begins to contract: unemployment rises as fewer construction jobs are needed due to an overabundance of supply.
A strong buyer’s market where housing supply heavily outweighs demand, but a recession is not necessarily a bad thing! Dropping prices could present a fantastic opportunity for buyers to make strategic real estate decisions.
Interest rates are still historically low
The Bank of Canada slashed the Policy Rate to 0.25% at the start of the pandemic to protect the economy. It was a temporary change that was always scheduled to increase.
As the economy recovers, the low interest rates have driven inflation up to record levels, which signaled that the time was right for interest rate increases.
Canada’s mortgage industry is one of the most regulated
The steps to getting a mortgage in Canada are some of the strictest in the world, and that’s a good thing! A highly-regulated mortgage industry protects homebuyers from borrowing more than they can afford and can safeguard them against unexpected issues, such as rising interest rates.
Ottawa’s economy is historically stable
Ottawa is often sheltered from significant economic swings because our housing market and employment sector are heavily padded by the government. Reports from The City of Ottawa show that the city’s unemployment has been lower than average since the turn of the century.
Is it possible to time the Ottawa market?
While we can look at the four phases of real estate and economic factors in our city, no one knows exactly what’s coming and when. “Timing the market” is a myth.
The real estate market is similar to the stock market: from an investment perspective, there is always a bit of risk involved. However, for those buying a family home they plan to live in and raise a family, there’s no time like the present to take the leap.
To read the full article, visit chellteam.com/blog.
Contact Susan, Patti or Sarah at 613- 829-7484 for your free home evaluation or buyer consultation.