3 Biggest Challenges Facing CAF Members on their HHT’s
Our team has specialized in helping military families buy & sell their Ottawa homes for over 15 years. It has always been the most enjoyable part of what we do. The current market conditions in Ottawa have created some real challenges for our military clients relocating the capital. It is a seller’s market and the absorption rate is at an all-time high. Here are the 3 biggest challenges facing our HHT clients in Ottawa:
1: Available properties to buy
In many neighbourhoods within the city there is not much inventory available. It is even more prevalent in the areas our military clients like to purchase. Kanata, Stittsville, and Nepean are all grappling with a shortage of available listings. These are historically low levels. The graph below illustrates this well. When supply is down and demand is strong it puts upward pressure on prices. It also tends to make house-hunting trips a bit more stressful!
2: Speed of Sales
Homes in Ottawa are selling at record speed. Before you arrive on your HHT the properties you may hope to see are sometimes sold. It is challenging when we have a full list of houses to look at, only to discover that many have been put under contract. It also means that when you are on the ground here the houses can sell quickly. Decisions on properties need to be made quicker than usual.
3: Multiple Offer Dates
This was the biggest hurdle for my military clients in 2019. Many sellers in Ottawa are not entertaining offers until a certain date and time. For instance, a house may come for sale on a Wednesday. Showings will begin but there will be no offers until the following Monday. Then on offer day, you may be competing against 3-5 other buyers for the house. I don’t have to explain the logistical concerns involved for clients coming in for a few days on their house-hunting trip. It is something that we had to overcome in 2019 for sure. All our HHT’s were successful last year.
Ok, so I have given you a few of the challenges that one might face. It is also important to know the solutions. Here are some of the solutions to tackle this challenging house hunting trip environment:
How to have a successful Ottawa HHT in a tough market
First let me say that 2019 was the most challenging posting season ever in Ottawa. In these extreme market conditions, we managed to secure over a dozen houses for our clients and nobody left empty-handed or even settling for a house. I think a reality show on my client’s HHT experiences this year would win an Emmy for best reality show!! We had some adventures for sure and it wasn’t always easy but we got the job done. Here are a few keys to success in this market:
Adaptability to Conditions:
We need to act fast in this market. Whether it is reorganizing a day of showings to get into a new listing first or having an offer prepared and ready the instant our clients need it. We had one client purchase only 3 hours after they landed because that is when the offers were being presented. Clients need to be adaptable too. In that particular case, our clients beat out 5 other offers and secured the house. They love the house and neighbourhood to this day! Trust was important for them. They needed to trust us that the house was a good value and a good fit. They got a perfect house because they were adaptable to the conditions and our team was prepared to act fast with them.
Exclusive off-market opportunities:
We plan our whole year around the HHT season. We are determined to find off-market properties for our incoming military families. Here is an example of a letter we sent out to over 20,000 households.
We do targeted Facebook ads and postcards for Kanata and Stittsville. Both areas have been very popular for our military clients. Each year we have many clients who buy our off-market opportunities. In many cases, they are outgoing military clients who love selling to incoming CAF members. It works out great! Our team is proactive in creating the best experience possible.
Experience:
Simply put, there is no team better equipped to handle house-hunting trips. We work together on our HHT’s and are extremely organized to make sure every detail is taken care of. There is no team that knows BGRS policies or can get quick information on them faster than us.
Adaptability to market:
Every HHT is different and requires the ability to adapt to different situations. Let me give you a quick example of this: In 2019 posting season Andrew and Liv were about to put an offer on a house they didn’t really love in multiple bids. On the morning of the offer date, we are getting a pre-inspection done to give us the best chance. We are sitting there and this perfect house comes to the market (send to us via email). We booked the appointment for the inspection. We raced to the house and we were in there 30 mins after it hit the market. The clients loved it!! I knew the other agent really well and we had an offer in the seller’s hand within an hour (we have Steph in the office coordinating things). It was accepted an hour later (we had a tight timeline). Interestingly, another offer came in just after ours was already accepted. We dodged a bullet for sure. The moral of this story is that we do what it takes to get our clients the best house possible. If it means switching gears completely then that is what we will do. Andrew/Liv got their dream house! We need to adapt to the market conditions that are presented to us.
Communication before you arrive in the city is also very important. If you want to connect with our team and talk about your real estate needs or have any general questions please feel free to reach out.
When I set out last year to undertake this exercise I was optimistic 2018 was going to be a good year. I could not predict just how hot our market was going to be. Early in the year, there was a significant shortage of housing inventory across the city. This of course is a huge challenge for my military clients who are coming in for their house hunting trips. Low inventory makes it extremely challenging to find something on the time crunch of a house hunting trip. Especially in the most active price ranges. The most price range in 2018 was 300-450k. In many cases, our clients were offering against as many as a dozen or more other buyers. This is common practice in cities like Toronto but a newer phenomenon here in Ottawa. There was lots of newer inventory by Spring but it only helped marginally. It was still a seller’s market but as the year went on it became less competitive for properties. Instead of 12 offers on many of the listings, we started seeing 2-4 offers depending on price range. This past year I was able to match up 3 military clients with off market properties. This really helped. We always have “off market” opportunities that we can offer to our preferred military clients on their Ottawa House hunting trips. To better understand the market it is good to look at the stats. Let’s have a look at the numbers driving our market.
KEY INDICATORS
AFFORDABILITY
Ottawa households have one of the highest household income averages in Canada. If you see the graph on the following page you can see that prices are still relatively affordable for Ottawa buyers. This graph looks very different for buyers in cities like Vancouver and Toronto. This is taken from the popular military neighbourhood of Fairwinds in Stittsville.
IMMIGRATION
If you Google best places to migrate to in Canada, Ottawa seems to be the number one choice. I am seeing many more immigrants choose Ottawa as their final destination. Toronto and Montreal are of course popular but when someone researches where to live in Canada, Ottawa comes out close to number one in almost all categories.
The common misconception out there is that these immigrants do not have the funds to purchase real estate. That is not always the case. In many instances, it is their credit or lack thereof that may be holding them back. In any case, these immigrants are coming at a record pace and will likely be purchasing real estate in the future.
MORTGAGE RULES AND INTEREST RATES
Banks have been forced to stress test buyers at a full 2 percentage points higher than the interest rate of their mortgage. This can impact purchasing power by almost 20%. I see the need for this but as house prices rise in major market centres there has been plenty of pushback. Interest rates have been slowly rising and this has put pressure on affordability for some buyers. If this trend continues it will have an impact on the market for sure. With the economy being more sluggish, the need for further increases may be curbed.
LOCAL ECONOMY
Ottawa has always been an underrated city in my view. We have a strong local economy with one of the highest median household income averages in Canada. Our unemployment rate is at historically low levels. It is a prototypical government town that has a growing technology sector and lots of solid, high paying professional jobs. It is only a matter of time before our prices surge and we become a global player in real estate. For a world-class capital city our prices still might be a bargain. Time will tell!
ELECTION YEAR
Housing affordability has climbed up to be one of the top issues for millennials. This makes it an election issue. A recent poll found that 64% of millennial voters want the government to do something about climbing prices. We will see the politicians respective platforms later this year. My prediction is that some of these platforms will have policies that will make it easier or more affordable for buyers to purchase. It could mean the return of 30-year amortizations. The stress tests might be eased or there could be a new policy altogether. Something to watch for sure.
MILITARY AND TECHNOLOGY
The DND move to the Nortel campus has been a major factor in the recent price appreciation in many of Ottawa’s west neighbourhoods. Interestingly, it is still a few years away from being fully operational as they phase employees into the new headquarters. In 2018 there was a major announcement that another prominent military operation headquarters will be built in close proximity within 10 years. The new building will house over 4500 employees. This will have an impact down the road on our real estate market. The location has not yet been announced but I have heard it will be at Shirley’s Bay just west of the DND. Once operational the mili
GROWTH AND INFRASTRUCTURE
Ottawa is growing and maturing into a world-class city. We should all be grateful to live in a city with such a high quality of life. By March we will have light rail going right downtown that will make life easier for commuters. This will just be the start of a much broader transportation plan. We have a super hospital that will be coming online in the years to come. Lebreton will eventually get the green light for redevelopment. Lots to be excited about. These will help fuel our economic growth in the years ahead.
2019 FORECAST
I believe it will be another strong resale year for Ottawa homebuyers and sellers in 2019. There is still pent-up demand and lots of buyers looking to purchase. This was reinforced just before Christmas as our team was involved in 2 multiple bid situations in the Fairwinds area. The targets were modern semi-detached townhomes, one that we sold for a record price with 3 offers. This is not the kind of activity you would typically see just before Christmas. It is indicative of the market in the entry level price points. The $350k-450k market will continue to be red hot this year. I have spoken with a few builders who had record years. Next year many homebuyers will be on the move to their newly built homes. This will hopefully create some much-needed inventory in 2019.
I predict we will have another seller’s market that will slowly slide to a balanced market by the time 2019 is complete. Barring an international crisis, it will be another great year for the Ottawa Real Estate market.
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