2011 was a year of big change for me personally, and as I look ahead into 2012 change seems to be another recurring theme (or is it?). The world we live in today moves much faster than in the past and life in Ottawa is no exception. 2012 will see Ottawa move forward with two more city building projects right on the heels of the successful Ottawa Convention Centre. They are the redevelopment of Lansdowne Park and continued progress on our light rail project, one of the biggest capital infrastructure investments in Ottawa’s history since the building of the Rideau canal. With all this positive change taking place here in Ottawa I wanted to share my thoughts on what I believe is in store for the Ottawa Real estate market and some of its’ biggest influences:
- The economic climate in many parts of the world remains uncertain but in 2012 we should begin to see stabilization in the Eurozone that will ease pressures in the financial markets, helping to reduce uncertainty and volatility in the stock markets and bring more investors back off the sidelines.
US Real Estate
- After a prolonged downturn in US real estate, the result of financial deregulation and sub-prime mortgages, many areas are beginning to see a turnaround in housing sales and values. While support may be regional, it would appear investors are seeing value and making a commitment to many area markets. These investments are a good sign that the US housing market is beginning to turn around, although many see it as a steady struggle back up, not a rebound.
- Mortgage interest rates hit an all-time historic low this month with the 5 year fixed mortgage rate at 2.99%. Low rates will continue to support real estate in Canada and the real estate market here in Ottawa and The Bank of Canada has indicated rates are likely to remain low for the balance of 2012 and into 2013.
- The factors above seem ready to positively influence real estate in 2012 but one complication for Ottawa may be our local job market. It would appear that the Federal Government is looking to reduce spending in 2012 or at least the acceleration of it, and that is likely to mean program changes and budget cuts that would inevitably translate into layoffs. This time around, Ottawa’s high tech sector is not buoyant enough to absorb unemployment as in prior years so I anticipate any job loses to be less significant in order to minimize impact to the local economy.
- Ottawa continually ranks among one of the top cities in the world to live, work and play and our future remains bright, and Ottawa’s forward thinking “city building” projects will help keep demand strong for homes here.
While some Canadian cities may be at risk after recent heady price gains fed by ongoing low interest rates, many Canadian economists feel otherwise such as David Tahl of CIBC “Prices are already softening, housing starts aren’t in the sky, MLS activity is starting to soften, so it suggests the market is already starting to level off, and that’s what we need”, “The housing market of tomorrow will not be as exciting as the housing market of yesterday,” he said in an interview. That most of Canada will be in a more balanced real estate market with less speculation and few bidding wars, with any correction likely to be limited to “overheated” sectors such as Vancouver and the “oversupplied” condo market in Toronto.
Overall I predict 2012 will bring much of the same for Ottawa; a great place to live and a stable, more balanced housing market with somewhat smaller appreciation in house prices for 2012. All of this must sound familiar to most home owners in Ottawa compared to those in other cities. While “change” can be exciting, stability can be a beautiful thing too.
While no one can predict with certainty what will happen with Ottawa’s real estate market, it is important to remember that buying or selling a home should be based on what is right for your personal situation in your life today (bearing in mind the economic times we live in). It is equally important not to make decisions about one of life’s most valuable assets by dwelling on the past or allowing future worries to impact a decision best meant for the present.
A year from now I hope we are all able to look back at 2012 and be thankful for our lives, our loved ones, and for the places we call home.
Thank you to all my friends & clients of the past year, and to those of you I have yet to meet but hope to have the privilege of helping one day.