A look back at 2007

In the month of December there were 583 residential sales, bringing the total number of MLS sales for the year to 14,579, setting a new record. Although December sales had decreased from last year’s monthly total of 679 units, overall 2007 sales exceeded the previous record of 13,782 which had been set in 2006. The average price of a home sale in Ottawa in 2007 also set a new record by increasing by 6.4% over the 2006.

Of course, market performance varies by neighbourhood and housing style. Chart 1 below compares the performance of a few different styles of houses and condos in 2007.

The monthly distribution of sales for 2007 fell in line with how the market has performed historically. The spring market had the greatest number of sales as well as the highest average selling price (approximately $279,000). This sales distribution is very consistent with what we observe year after year. As a result, we are entering the best time of the year to sell properties. Refer to graph on the right.

What to Expect

in 2008

Following an exceptional 2007, the 2008 Ottawa’s real estate market should be characterized by more steady and moderate growth. A recent Royal LePage market survey forecast predicts that the average selling price for a home in Ottawa should increase by 4.2% up to $285,000. This report also predicts that housing prices will increase by 3.5 per cent nationally and that the number of transactions will fall by 4%. Refer to chart below.

The Bank of Canada’s reduction in the

overnight lending rate in December 2007

by ¼% should be a help to first time home buyers.  This homebuyer demographic is expected to swell in 2008 as people look to

take advantage of reduced lending rates and longer amortizations of up to 40 years.  The currently low interest rates, and the possibility that they could drop even further in response

to the rates in the US, should not only support these new home buyers, but also provide some confidence to those who are looking to move up in the market.

Home Improvements:

Cost vs Value

Once again,we are pleased to provide you with the annual 2007 Cost vs Value Report. If you’re thinking of remodeling or adding onto your house the following returns on your costs should help you with your decision making.

In a real estate transaction, the ‘cost recouped’ for a remodeling project depends on avariety of factors. These include the home’s layout, the quality of finishes, the condition of the rest of the property, the value of similar homes nearby, supply and demand in the neighbourhood and the property’s specific location.

* These 2 charts demonstrate the percentage of the cost that a homeowner recouped for the improvement for their Remodels & Additions.

Land Transfer Tax:
First-time home buyers refund to include resale homes.

The Ontario Liberal government has recently announced proposed legislation that would extend the land transfer tax rebate to first-time buyers who purchase resale homes. The rebate would apply to agreements of purchase and sale that were entered into after midnight on December 13, 2007. Until now, this rebate has only been offered to first-time buyers who purchased newly built homes.

Once this proposed amendment becomes law, all first-time home buyers in Ontario will become eligible for a rebate of up to $2,000 of the land transfer tax they are required to pay to the province upon purchase of their home. Until the new law is passed and given Royal Assent, first-time homebuyers purchasing resale homes must continue to pay the land transfer tax upon registration. Once the new amendment is signed into law, a refund affidavit will be published that buyers may submit to receive their rebate.