Will Ottawa Real Estate Slow Down in 2024? – Here’s a Realtor’s Take on Ottawa’s Market Forecast!

One major question on everyone’s mind is, will Ottawa Real Estate slow down in 2024? Last year’s market was a low for most real estate markets due to interest rate hikes & sidelined buyers. From The Adam Mills Realty Team, here’s what we think is in store for the market this year based on current trends, Royal LePage predictions & more.

Here’s what’s happening in the Canadian market in general and how these trends will impact 2024:

As we found out in October of 2023, the Bank of Canada decided to hold interest rates at 5% for the foreseeable future as evidence from previous rate hikes indicated dampening economic activity. We’ve seen decreased spending across the economy as a whole but in terms of Real Estate we’ve seen demand drop slightly as the cost of borrowing became unattainable for some.

Even with less demand and less buying power, we’re still seeing incremental price increases both month over month and year over year in Canada. In Ottawa specifically, in October 2023 we saw a 2.9% YoY average sale price increase and a 6.6% increase in inventory from October 2022. However, YTD sales activity as of October 2023 was down 12% from October 2022.

What does this mean? Our markets will remain active despite affordability concerns and even when activity dips, prices aren’t.

The aggregate price of a home in Ottawa increased 4.8 per cent year over year to $754,700 in the fourth quarter of 2023. A single-family detached home increased 4.9 per cent year over year to $866,700 in the fourth quarter of 2023, while the median price of a condominium increased 4.5 per cent to $401,100 during the same period.

“The recovery will begin when consumers have confidence the home they buy today will not be worth less tomorrow. We see that tipping point occurring in the first quarter, before the highly anticipated easing of the Bank of Canada’s key lending rate.” – Phil Soper, Royal LePage CEO

What does 2024 hold for Ottawa’s Real Estate Market?

Ottawa real estate has been a historically strong and stable market compared to other cities due to its relative affordability and strong job market. So we predict that throughout 2024 Ottawa real estate will remain stable and may even see minor gains. Royal LePage predicts the National aggregate home price to rise 5.5% in Q4 2024. It’s predicted that the Ottawa market will continue to see growth in 2024 and 2025.

What it comes down to is the balance between supply and demand. In 2024 demand will continue to outpace supply. Even though at the end of 2023 there were less people in the market for a new home in Ottawa than our 5 year average, we still don’t have enough supply to close the affordability gap.

Prices will continue to inflate at what may be a slow but steady pace until we close that affordability gap with more housing. Right now, in Ontario there’s a gap of about 1.48 million homes, so we’re confident that gap won’t close any time soon.

What will happen to Ottawa real estate if interest rates come back down?

As mentioned, the Bank of Canada held their rate of 5% in October and it is predicted that the rate hikes may be on pause for the foreseeable future. But, what will happen if interest rates come back down this Summer as predicted?

First thing to mention is that we don’t think we will see pandemic-level low rates again in the near or even distant future. However, rates will eventually fall back into the neutral level of 3-4%. When that happens, we’re going to see a rush of buyers come off the sidelines which will put upward pressure on prices.

Again, it all comes back to supply and demand.

So, should you invest in Ottawa real estate now or in 2024?

If you’re looking to time the market and get in when interest rates drop, you’ll be waiting on the sidelines for a while and you won’t be alone when you decide to jump back in. In a BMO poll completed over the summer, it found that 68% of Canadians were planning to wait to buy until interest rates drop.

If we see an increase in buyers in the market we will definitely see increased prices so waiting may not be the answer.

Yes, buying power is limited for a lot of Canadians right now but if you can adjust your expectations and afford a home now it might be in your best interest to jump into the market. Competition is lower and homes are sitting on the market for longer than we’ve seen in quite some time which means there are deals to be made.

If you’re still on the fence, reach out to us. Our team is ready to support you on your real estate journey, whatever that may look like. We promise to provide information based on data and expertise that will help guide you to make the right decision for you. No pressure, just helping you set yourself up for success.

Who knows, maybe 2024 will be your year!