Housing sales drop 16.7% in March

Challenging weather' among causes cited for Ottawa resale drop

Bert Hill, The Ottawa Citizen, April 2008

Sales of resale housing fell 16.7 per cent in March in Ottawa with cold winter weather getting the blame from the real estate industry.

But some observers say that worries about the U.S. economy and hopes that mortgage rates will fall are also responsible.  Strong demand for new housing could also be a factor.

The Ottawa Real Estate Board said that 983 units were sold in March at an average price of 288,068, up 5.1 per cent compared to a year earlier. 

"Record snowfalls and challenging weather certainly hindered sales last month," said board president Heather Skuce."

"It's touch for people to get out and see houses when even getting out of the driveway is a challenge."

However, the slowdown in sales in Ottawa - down 12.1 per cent in the first three months of the year - could be a sign that some buyers are holding back to see if the U.S. economy creates trouble north of the border.

Barry Nabatian of Market Research Corp. said "snow and cold weather is notth major reason.  There are psychological factors working against the market.

"We have seen the region lose about 2,000 jobs in the last five months.  People are concerned about the state of the U.S. economy and concerned that things could get worse here."

He said that as central banks cut interest rates to stimulate the ecoomy, some potential homebuyers are likely waiting to see how low mortgages rates could go.

But Brian Card of the Corporate Research Group said that sales of new single-family houses was close to record levels in the first two months of the year.  He said strong demand for new condominium apartment projects could be luring buyers from the resale market.

Weather goes only so far in explaining the situation.  In Montreal, which also had a tough winter, sales declined only four per cent during the first quarter of the year.

But in Toronto, where prices have risen much faster and higher than in Montreal or Ottawa, housing sales fell 27 per cent in March.

Paradoxically, one of te biggest Ottawa housing categories to experience a slowdown is single-storey condominiums.  Most are in apartment buildings which are more accessible in bad weather.  Sales fell 20.3 per cent last month.

Sales of the two biggest two-storey houses and bungalows, fell 19 per cent and 26 per cent respectively.

"Homes that sold last month were on the market for an average of only 34 days, proving that interested buyers are obviously still out there getting it done, despite the snow," Ms. Skuce said.

The luxury market fared better.  Sales of housing priced above $500,000 rose eight per cent to 67 units last month.

So far this year, 13 houses and condos priced over $1 million have sold compared to seven a year earlier.