Tag: Real Estate News

November 2018 market statistics continue displaying trends indicative of a fast-paced real estate market for Ottawa in 2018.

Members of the Ottawa Real Estate Board sold 295 condominium-class properties in October 2018, an increase of 0.3% from November 2017.

The average sale price for a condo in Ottawa remains reasonable and steady at $285,764, an increase of 11.1% from this November last year. *

Between $175,000 to $274,999 was November’s most prevalent price point in the condominium market, accounting for almost 47% of the units sold.

Condo sales continued to lead the way in November which included a higher average price percentage increase than single-family residential sales this month.

Curious about November 2018 market statistics for residential class properties in Ottawa as well? Click here to read the full story.

 

*Average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Price and conditions will vary from neighbourhood to neighbourhood.

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iBuyer

Buzzwords, the world has been suffering these terms for a long time! Everyone talks about ‘FinTechs’, being an ‘Entrepreneur’, or going on the ‘Keto Diet, just to name a few of 2018’s buzzwords. Society always seems to come up with a new buzzword that we all use, yet its much more hype than real substance. The real estate industry’s buzzword of 2018 has without a doubt been iBuyer.

The term iBuyer has been the talk of Wall St and the real estate industry over the last few months. Everyone is trying to get into this space; Zillow, OpenDoor, and even Coldwell Banker have been engaging with this buzzword. With all of this hoopla around iBuyer, let’s take a look and see what it’s all about.

What is iBuyer? (Hint it’s an algorithm)

At its core, it is a platform that uses an algorism to generate an offer on a property. The platform uses the algorithm to calculate the value of a home based on a variety of factors including location, size, potential work needed, and discounted cash flows to come up with a value for the property. This value is not the true market value of the home. It is a slightly discounted value that creates a profit margin for the buyer.

How does the Process work?

The process is relatively simple. A Seller would fill out a form about their home and provide details about the house. If the algorithm deems it a worthy property, the iBuyer would make an offer, conditional upon inspection. After which, a price reduction may be asked for. Alternatively, someone representing the Buyer can go inspect the property, take their findings to the platform and use it to make an unconditional offer on all things considered.  Once the offer is made, the Seller can accept it, reject it, or counter it. Once a deal is finalized, the closing date of the deal can be done in a matter of days. Everyone likes a quick closing in real estate!

How does the Buyer benefit from iBuyer?

First and foremost, the majority of people that use iBuyer are the owners of the platform i.e. Open Door or Instant Offer on Zillow. These large platforms build the platform and algorithms in order to buy properties for a discount that they can resell for a profit in the future on their platforms. Typically, these “Buyers” are looking for properties that need repairs so they can add value through renovations. Sounds like the oldest business model in the book, buy low and sell high.

What are the Seller’s Benefits?

Seller have a lot of headaches when it comes selling their home the traditional way. They have to make sure their home is always showing ready with everything perfectly placed and staged to show your home in the best way. This standard of being showing ready is incredibly difficult, it’s something that most people struggle to keep up with. There are dishes, toys, iPad’s, books, bags, and whatever else you have all over the place (Yes, we all have messes in our homes). Add in the consistent upheaval of your schedule from Buyers wanting to see your place from 8 am to 8 pm 7 days a week, you have a nightmare on your hands. Not only do you have to clean up after your every single move, but you have to put your whole life on hold to let people into your home. I’m getting anxious just writing about it. In comes iBuyer to save the day! Get your home showing ready once, get a photographer to take amazing photos, and then your done. You can relax, have your own mess, and have your life back while you sell your home. In some cases, you don’t even have to do that. All you need to do is fill a form online and presto! Offer received.

iBuyers provide lighting speed offers with quick closing dates, which means you could sell your home faster. Imagine you’re on vacation, sitting on the beach. The ocean view is breathtaking, you can smell the salt of the water. As you’re enjoying the view with your favourite mocktail (who are we kidding, cocktail!), you get an email with an offer on your home. Wow, what a dream! iBuyer makes this a reality… at least the offer part. The vacation is probably not paid by iBuyer.

Do Sellers Really Win?

Most sellers aren’t inclined to accept a below market value offers (5% – 10%) plus a commission (4% – 6%). There would be a subsect of Seller that would take advantage of this i.e. in the case of a divorce, bankruptcy, or relocation. Otherwise, I don’t see Sellers, at large, accepting anything less than top dollar for their homes. For the iBuyer service providers, there is an unspoken risk to them. Most of these providers are technology companies, not construction companies. Their goal is to buy properties at below market value, do a minor or major renovation to the property and sell it on the market at a premium. Sounds pretty easy right? Wrong. Warren Buffet has said on multiple occasions, “Invest in what you know and understand.” With all due respect to these companies, their core competency is in building the technology of these platforms, not in the construction business or understanding the real estate market. My prediction is that these companies will struggle with controlling construction, have higher financing costs, and shrink their profit margins. Combine that with a peak in the real estate market, these companies could be holding massive losses on their books if they’re not careful. As most of these companies are publicly traded, you can expect to see lower than expected earnings and a drop in share price.

Down the line as these platforms and consumer behaviour evolves, I can see the consumer being able to make pricing decisions online with readily available, relevant, and accurate sales data (through platforms likes DigiRealty.com). I can also see everyday buyers making an offer online through these platforms with relative ease. All of this said, the one thing that won’t change is our fundamental human emotions. We all feel happiness, anger, sadness, and excitement. Those emotions will always play a roll in our lives. And when you walk into a home and see a little doggy door that reminds you of the house you grew up in, that emotional connection you have to that memory is what connects you to a home. Not an iBuyer platform.

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The October 2018 Market Statistics For Condominiums in Ottawa have Arrived!

October 2018 market statistics continue displaying trends indicative of a fast-paced real estate market for Ottawa in 2018.

Members of the Ottawa Real Estate Board sold 324 condominium-class properties in October 2018, an increase of 24.1% from October 2017.

Average Days on Market (year-to-date) for condominiums in Ottawa are down 24% from 68 to 51 days.

The average sale price for a condo in Ottawa remains reasonable and steady at $271,350, a small increase of 0.6% from this October last year. *

Between $175,000 to $274,999 was the most active price point for condos in Ottawa this month, accounting for almost 53% of the units sold.

Lack of supply remains a force in Ottawa’s real estate market, compared to last year, condo inventory is 34.5% lower than October 2017.

Curious about October 2018 market statistics for residential class properties in Ottawa as well? Click here to read the full story.

 

*Average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Price and conditions will vary from neighbourhood to neighbourhood.

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Real Estate Franchises are Losing Stock Value

Remax and Realogy Stocks Tank Amidst a Changing Industry

No one seems to be talking about this. Large Real Estate Franchising Groups are Losing Stock Value, and Fast.

The two largest conventional bricks and mortar brokerage conglomerates stocks are tanking. Remax and Realogy have lost close to 50% of their stock value in the past 52 weeks.

On the other side of this news, private investments are fueling over $2 billion in new funding into efficient/scalable broker concepts. $2 billion in market cap lost on one side, $2 billion in market cap gained on another.

Remax and Realogy Stocks

Royalty Fee Models Don’t Align With Franchisor and Agent Member Long-Term Growth

Brokerage Holding companies such as Realogy and Remax rely on incremental individual contributions from their Franchisors agent base. These royalties flow upward from the Franchise to the Holding Companies. The challenge with this model is that both the Franchisor and the Holding Companies are not truly aligned with the agent members due to the conventional cap system. The cap model sees contributions diminish, if not disappear, once an agent member hits certain annual milestones. Low producing agent members (of which form the majority of membership base) contribute a royalty through their Franchise to the Holding Company, in an amount that is very similar to that of a top producing agent member.

In an industry where consumers are demanding efficiencies, the bottom is being weeded out and the 2-10 annual transaction type REALTORS® are finding it harder to justify their value. It is only obvious that the days of mass agent membership are under pressure and the result will be disastrous to the large franchise brands of the past.

Large Real Estate Franchises are Losing Stock Value, and Fast

If this opinion proves to be correct, unless these large franchise holding brands can divert their strategic resources into acquisitions of emerging counterplays, this trend will continue with the steep and aggressive slide that is becoming of a fragmented industry. Paving way for a bright future for forward-thinking scalable, agile operations and technologies, such as DigiRealty.com and others.

These large brands are proving to be the authors of their own misfortune. The brands in the position to stand out as industry stewards became balance sheet adjusters and profit wielders, as opposed to innovators. The results will be obvious.

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Zillow in Canada

Is there an equivalent to Zillow in Canada?

Zillow Group has become known for providing American Real Estate Searchers with a fast and easy to use, map-based real estate search platform. Along with their easy to use search platform, their website displays an abundance of property data, as well as their custom Zestimate™ feature which provides searchers with a quick and effortless way to research home prices. This allows Real Estate Consumers to do their own research by browsing real estate listings and sales data, prior to engaging with a professional of their choosing or with one of the Realtors® paying for Premiere Agent™ advertising space on Zillow’s platform. Is there currently a Zillow in Canada, or an equivalent that is trying to fill in the gaps?

To dive into whether there is a Zillow in Canada let’s first delve into Zillow’s monetization model. Their model is structured by collecting Premier Agent™ fees from REALTORS® paying to appear on listings within geographic regions of interest. This allows Premier Agents™ an opportunity to receive Buyer side leads on property listings that were supplied by another REALTOR®. With their acquisition of Mortgage Lenders of America, Zillow is also looking to collect orientation fees when they provide mortgage leads submitted through their platform to external lenders. These orientation fees may play into their home buying angle as well.

Update on Zillow in Canada

With regard to Zillow in Canada, the group recently made a move to display Canadian listings on their platform and they are in the process of adding more listings via alignments with Brokerages on this side of the border. The UX of the website is classic Zillow and very clean, but the listing inventory is low and the high-value data sets (sales data, Zestimate™ etc.) available stateside are not currently present.

Comparable Platforms to Zillow in Canada

In Canada, all the real estate boards feed their listings to the national website, Realtor.ca. Realtor.ca is operated by CREA, the Canadian Real Estate Association. This website has a national presence but is missing many of the features Zillow offers such as providing solid data and ease of use to search on their platform. Realtor.ca is typically referred to as clunky, dated and old.

On the surface level, DigiRealty.com would be the best Canadian listing provider with a similar user experience to Zillow. DigiRealty’s focus is to provide searchers with the most intuitive, fast and easy to use real estate search site. DigiRealty.com and Zillow also have similarities and differences in their monetization model. DigiRealty.com is operated by DigiRealty Technologies, which also owns and operates a wholly owned subsidiary real estate Brokerage. This entitles the company to monetize both commissions and advertising placements from aligned Agent Advertisers.

For readers that are unaware, here is a high-level overview of how some of these platform models are organized. Start off by viewing the sales channel as a funnel. Consumer traffic is in the top of the funnel (pageview etc.), consumer inquiries are in the middle of the funnel (leads, profiles and inquiries received by the Agent Advertiser), and a successful conversion/sale is at the bottom of the funnel (a closed deal). Obviously, the more deals that make it through the funnel, the more the platform can charge their Agent Advertisers for placements.

All things considered, Digirealty.com is likely the closest platform to Zillow in Canada

DigiRealty has an advanced map-based UX, fine-tuned advertising, placement and lead routing systems and a dynamic ‘go-to-market’ plan that will not be burdened by the bottlenecks that are existing for the established first movers. Where DigiRealty intends to excel, is always increasing the top of the funnel, along with focusing on reinventing the middle of the funnel activities centred around speed and thoughtful in market alignments. The already existing monster platforms know there is a problem with response speed and responder market knowledge alignment. Unless a multi-year revenue dip is okay with shareholders, they will be stuck with legacy premier placements and the associated downfalls.

DigiRealty believes that in-market, knowledgeable, lightning fast response speed and on-the-ground Agents will drive conversions. As a result of not having legacy booked revenue (that must stay on the books) from a potentially depleting premiere agent advertiser pool and a slow to response placement routing system that will bottleneck conversions DigiRealty is able to be more agile.

I wonder if the legacy, single player agent advertisers will leave platforms due to increases in response speed pressures that their small business cannot meet? If this is the case and we assume that qualified teams can nurture more middle to bottom of funnel leads to a conversion, will the resulting revenues offset the lost revenues? How does this transition look? It seems hard to imagine a case whereby a platform can service fast trigger teams and slow-moving placement agent advertisers at the same time. On a platform level, the teams likely provide better funnel to conversion movement, it will just be interesting to see how the shake back takes place.

In short, maybe the question should be, is there a Digirealty.com model in the states?

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Smoking Pot Inside Condos

A hot topic right now in the condo world touches on the Federal government’s push to legalize marijuana across Canada. Many condo owners are becoming increasingly concerned as legalization nears, with what legal rights and measures their respective buildings can take in order to prevent smoking pot inside condos and common areas in condo buildings. One condo board in Toronto near Sheppard and Don Mills wants to prohibit the smoking of cannabis, as it already gets countless complaints about marijuana odours wafting between units, triggering asthma and allergic reactions. – nowtoronto.com

Further, Ottawa Public Health agency recently made a recommendation to the province to outright ban smoking pot inside condos and apartments, including balconies. – cbc.com

The question is – Is it within the rights of Condominium Boards to ban this soon-to-be legal substance within privately owned units? According to Michelle Kelly, a specialist in condominium law, bans such as this are done by the Condo Corporation creating a rule (under Section 58 of the Condominium Act). – globalnews.com This rule would then be circulated to owners, and unless the owners call for a vote, and vote against it, it enters into force. Rules such as these are created in order to promote the safety, security or welfare of the owners, and to prevent unreasonable interference. Things such as the pungent smell of second-hand smoke could be considered a nuisance, and therefore a new rule would be reasonable.

Ontario Landlords are also becoming increasingly concerned with the upcoming legalization. The concern lies with the major financial cost that could be associated with removing the smell of marijuana after the tenant vacates. – nowtoronto.com Currently, landlords are able to ban smoking for new leases, yet with existing leases, it is illegal to modify any of the clauses before the natural end or termination of the lease.

An even further grey area is whether condominiums can ban smoking for those who have a medicinal license to do so. Many argue that medical consumers would be exempt under the Ontario Human Rights Code, which may result in a legal challenge by Condominium Boards. Needless to say, this hot topic is not going anywhere anytime soon.

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The Merit - 108 Ligar St Exterior Image Luxury Condos

Ottawa’s real estate market has been seeing good days. With strong sales and steady prices, both buyers and sellers are enthusiastic about the market as a whole. More young adults are considering purchasing their first home in Ottawa rather than in cities like Toronto and Vancouver where a need for affordable housing is slowly crippling those cities’ markets. This relative stability has injected an exciting shot of life into a slightly smaller, yet equally valuable part of the real estate market; luxury condos. Ottawa used to be a city of houses. Directly in the downtown core, residences were mostly traditional looking houses or, in the case of apartment buildings, simple structures that were rarely more than a few stories high.

In recent years, it’s almost a competition among talented firms to change the face of the city. Aesthetically pleasing luxury condos are being built as quickly as possible to meet demand amongst the city’s residents.

Ottawa Has A Brand New Face

Last year, Ottawa saw the resale of more than 24 luxury condos, each worth over $1 million. This is more than double the number sold in 2016. 2018 is also seeing the construction of various luxury projects like Keel and Roca Homes’ The Queen E. These buildings take modern living to a different level and are being snapped up by buyers eager to have the hotel experience in their homes. For instance, 1451 Wellington will invite residents to relax in their personal entertainment suites and will come complete with guest suites that are maintained by professional cleaning staff, along with a lap pool and an elite fitness centre.

While older, more traditional looking houses remain in areas like the Glebe and Centretown, there is no doubt that Ottawa’s real estate market is changing. Nearly every corner of the city’s core could be expecting a new luxury condo development. It’s a significant change from a few years ago when people balked at the idea of paying condo fees for amenities they felt they could do without.

The ‘New’ Luxury Condos Dweller

When noticing the changes in the market, the question inevitably arises about who is actually buying Ottawa’s luxury apartments. Property developers are excited because, unlike other cities where purchasers are typically well-established professionals, Ottawa’s homeowners occupy different demographics.

Older individuals who are looking to downsize, perhaps after their children have left the nest, are turning to condos as a headache-free option to access everyday luxury. There are also young professionals who are beginning to settle into their careers and adulthood. With a median annual salary of $86,000, the highest in Ontario, young adults working with businesses like Shopify or Pythian have fuller wallets to play with.

With the relative stability associated with living in the city, it’s no wonder people are more willing to spend top dollar on luxury developments they can actually enjoy.

It’s likely that Ottawa will be enjoying these good times for years to come. A strong economy, a safe city and a steady migration of skilled workers means housing will continue to be a great investment choice.

If you’re hoping to find the perfect luxury condo with all the perks your heart desires, drop us a quick email. As always, Ottawa’s Condominiums will be right in the middle of the action!

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New DND Headquarters

Most of us are familiar with the landmark “needlepoint building” that once housed Ottawa’s largest tech company, the now fallen Nortel, located just off Moodie Drive right near the 417 Highway. This iconic building sat empty for several years after the Nortel collapse, until the Department of National Defense (DND) finally made a successful bid to revamp this large 370-acre campus into their new DND headquarters. – Ottawa Community News 

As with many major retrofit projects, delays were inevitable. Nearly a decade into this 800-million-dollar project, it is running almost two years behind. The end result of this three-phase shift will see 8,500 Civilian and Military personnel being transferred to the old Nortel campus, with the end target being March 31, 2020. – Ottawa Citizen

One area that is seeing significant growth from the first phase of 3,500 workers being transferred is real estate in Ottawa’s west end. Month after month the west end districts have seen the majority of price hike growth on properties, according to the Ottawa Real Estate Board. Coincidentally, the bottom 10 districts are located around the current DND Headquarters located at 101 Colonel By Drive, which will be shutting it’s doors once the new DND headquarters is staffed. – Ottawa Citizen

Although it is still too early to determine exactly the influence that the new DND headquarters will have, this early evidence is a strong indicator that prices will continue to grow in the clustered communities surrounding this major new employment hub.

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Canadian Mortgage Rates are Rising

Canadian mortgage rates are rising. Back in mid-2017, news sites predicted the Bank of Canada was preparing to raise its interest rates to reflect the current economy. Speculation was rampant as to how much the rates were going to climb, with many economists predicting increases of a quarter of a percentage point. They were right. Lending rates went from 0.5% to 0.75% in early 2017.

And then they went up again. 0.75% to 1%.

Just this month, the Bank of Canada announced they were raising their interest rates yet again, this time to 1.25%, a move once more pegged to the booming Canadian economy. The bank is expected to raise rates to 1.75% by the end of 2018.

Canadian mortgage rates are rising with the country’s six largest banks, anticipating the move, already increasing their prime rates as well as their fixed rates. The industry is speculating that this move is an effort to cool down the blazing real estate market to prevent a crash. Of course, this sudden hike breaks no records and is still significantly lower than pre-2014 mortgage rates.

It’s too soon to predict the long-term outcome of the banks’ actions, but house sales are expected to continue at a similar breakneck pace as evidenced by the increase in activity for the 5th consecutive month, recorded at the end of December 2017. There are simply too many factors affecting the housing market like the low unemployment rate and millennial ageing which the rate increase will be unable to buttress.

What does this mean for Canadians?

So, what does this mean if you’re a homeowner? Well, if you have a fixed rate mortgage, then you’re free to flip to the other page. That is until your mortgage comes up for a renewal. In this case, that’s about 47 percent of you with 31 percent due to follow within the next one to three years.

These rates should be of particular interest to variable rate holders as it could affect their mortgages. The increases were anticipated, with several real estate companies advising customers to renew their mortgages or switch to fixed rates as soon as possible. As one or two more increases are expected by the end of the year, it’s not too late to take this advice.

If you’re hoping to purchase your first home and are dissuaded by these reports, don’t be. As a future homeowner, the best move will not be backing away from your property-owning dreams. Rather, you should consider getting pre-approval and locking in a closed mortgage to cushion yourself against any more changes. With the market bracing itself for more action as Canadian mortgage rates are rising, there’s no better time than the present to purchase a property.

Overall, market experts are not particularly worried about Bank of Canada’s moves. We’re still a long way from eye-popping 15% rates as anyone who purchased a home in the 90s will tell you. Combine this relative stability with an iron-hot economy, there’s no doubt that the market has more than enough resilience to ride this wave which means, as a homeowner, you can rest easy. Check out this National Post Article.

 

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A major announcement on the new Lebreton Flats Development

A major announcement on the new Lebreton Flats Development is expected according to sources involved in the talks between the RendezVous LeBreton Group and the NCC, a tentative land deal has been reached over the future development of Lebreton Flats – ottawacitizen.com. The Lebreton Flats Development, which is planned to have over 4,000 housing units, a major public square, and a landmark new hockey arena, has an estimated price tag of over $3 billion and will without a doubt have a huge impact on the City of Ottawa.

Some may question the significance of this project and whether it’s the best use for this highly coveted piece of Ottawa real estate, as well as whether taxpayer dollars should be spent on the infrastructure to support its build out. I stand to argue that this project is one of, if not the most important development projects needed for the City of Ottawa in recent years.

Let’s think BIG PICTURE. What is it about a centrally located arena that adds value to a community? – The Economic Case for a Downtown Event Centre. For starters, having an event centre that is located in an area that is equally accessible to those in both the West AND East ends of Ottawa improves the quality of entertainment and ensures a strong fan base for attendance at the games. Yes, this is a money-making entertainment business and in order to deliver a high-quality entertainment product, a revenue stream from a strong fan base must exist. Locating the hockey arena on Lebreton Flats Development will create equal accessibility for Ottawa area residence and along with the restaurants, shops, and more expected to be built alongside the arena, create a more appealing atmosphere of complimentary service businesses to attract a larger fan base to games.

My second point surrounds the issue of smart urban planning and efficient use of taxpayer dollars. A city cannot be sustained by spending endless sums of money building new infrastructure further and further out into untouched farmland, which is what Ottawa has seen for far too long now. Urban intensification is now a widespread phenomenon across North America, and it’s happening to lessen the burden on cash-strapped municipalities.

Yes, there will be those who protest “not in my backyard” but the reality is, development always occurs in someone’s “backyard”. Another positive outcome from this development will be the 1,100 affordable housing units that will be integrated into the RVL project and will help lessen the burden on the cities 10,000+ waiting list for affordable housing. Ottawa’s new LRT line will also play a huge factor in creating and sustaining this new community –  the Lebreton Flats Development will attract big Ottawa commercial real estate investments. With the line running directly through Lebreton Flats, residents will have a  very convenient alternative method of transportation to get around, and with that creating an overall healthier environmental footprint for the city.

The upside of RendezVous LeBreton and the number of Ottawians that will gain enjoyment from its new urban housing options, entertainment offerings and commercial spaces, far outweigh any downside. With a major announcement on the new Le coming, let’s be of the mindset of one wanting to continue to grow into a world class city and to welcome RendezVous LeBreton as the next step on this path.

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