'Significant uncertainty': How COVID-19 could change Ottawa's real estate market

Realtor Kristy Morrison says she loves rural living.

Once the novel coronavirus has been tamed or eradicated and the world returns to “normal,” what will that look like? Will COVID-19 fundamentally and permanently alter our lives? In an occasional series, this newspaper examines the potential lasting effects of the pandemic on how we live, work and play.

Realtor Kristy Morrison can pinpoint the exact date she saw Ottawa’s increasingly hot housing market come to a screeching halt.

It was March 13, and the city was entering lockdown mode to try to stem the spread of COVID-19.

“Everything stopped. All my clients were like, ‘Oh my god, what are we going to do? What’s happening?’

“No one really wanted to look anymore. They were scared. They didn’t know what was going to happen to the real estate market.”

In the short term, their worst fears have yet to come to pass. Ottawa home sales – and prices – have proven remarkably resilient in the face of COVID-19 shocks,

thanks in large part to a market

consisting of government, high-tech, education and other higher-income workers whose employment has remained largely unaffected by the pandemic.

As for the medium and longer term, quantitative predictions about the real estate impacts of COVID-19 remain little more than guesswork as long as the trajectory of the pandemic remains unclear.

“As the virus is overcome, cities will bounce back, but there is significant uncertainty with respect to the path and timing of the recovery,” Aled ab Iorwerth, deputy chief economist at Canada Mortgage and Housing Corporation, said in a June 23 report on the housing market outlook in Canada’s largest cities. “Rapid elimination of the virus and a resurgence in global trade will clearly be of benefit while further waves of the virus will put negative pressure on the economy.”

For the time being, the industry has to wait and watch how COVID-19 changes home buying in Ottawa. But educated speculation — and observed changes in market behaviour — suggest the pandemic could have residual real estate influence, particularly among those with significant buying power.

For Morrison, a Kemptville resident who lives on 36 acres, the appeal of rural real estate is self-evident: more property, access to nature, and some distance between you and your neighbour. She posted to social media early in the pandemic, to invite anyone in need of some outdoor time to come walk her property. Messages poured in.

“In my buying circle, I do have people who are actually pivoting. They want more land.”

In many cases, Morrison believes the thought of a move to a larger lot in one of Ottawa’s outlying communities might have been a vague idea before the pandemic. Then, families were forced to stay at home for three months, with little ability to enjoy the public greenspace they used to rely on.

“I don’t see a whole-city massive move to the country,” said Morrison, but she expects it’s a growing trend.

Fellow realtor Marnie Bennett agrees. Pre-pandemic, she saw buyers were looking at smaller homes on smaller lots on the assumption they’d be spending much of their time out of the house, at work, the gym, restaurants.

“Now, the interest has totally flipped,” said Bennett. “Instead, they’re buying bigger houses, bigger land, because they want more space.”

And because Ottawa home prices remain at remarkable highs, Bennett said she’s fielding calls from clients looking to move after a year or two in their current home, rather than the typical five- to six-year time frame.

“Prices have gone up so much, they have much more equity. And also the interest rates are at historical lows, so their buying power has gone up considerably, too,” she explained. “They can buy more house now, for the same price.”

Just last month,

city council voted

to add 1,281 hectares of residential development land inside the urban boundary while setting a goal of situating more than half of all new homes built until 2046 in established communities.

If the pandemic indeed prompts more of an appetite for larger houses on more land, would that come at the cost of Ottawa’s vision for intensification?

Not necessarily, according to Benjamin Gianni, Carleton University professor of architecture and urbanism.

“The larger issue really is cost – the cost of housing and people’s ability to afford to live in various places, which is still going to be the primary determinant of how people make housing choices,” said Gianni.

 Roy Nandram, president of RND Construction, sees opportunities if work-from-home becomes a permanent expectation at some companies and some clients look at additions to accommodate aging parents they don’t want to see in retirement or long-term care. Tony Caldwell

In its June 23 report, CMHC forecast the average annual price of residential MLS transactions in Ottawa – $443,504 in 2019 – would range between $406,000 and $460,000 in 2021, and rise to between $415,000 and $490,000 in 2022.

“I think as long as housing prices keep rising, people are not going to be looking at single-family houses for their starter homes.  They’ll be looking at townhouses or stacked towns or condos. It’s just the reality of affordability,” said Gianni.

Regardless of housing type and location, another COVID-19 impact that the industry is pivoting to accommodate is the increasing expectation that work be done remotely rather than at the office.

According to

a June study by the Angus Reid Institute

, the majority of Canadians working from home expect to continuing doing so after the pandemic is over.

“We are definitely assuming that there will be a demand for more work-from-home, and as a result, we’re looking at varying some of the designs of some of our homes,” said Josh Kardish, vice-president at local builder eQ Homes. That could look like re-configuring a layout that previously included a dining room to instead accommodate a home office, or changing some hardware elements to improve wifi connectivity.

Added fuel to this demand would be the potential expectation that employers subsidize the cost of renovations or additional home office space, said RND Construction’s Roy Nandram, if work-from-home becomes a permanent expectation at some companies.

As a renovator and custom home builder, Nandram said he also imagines some clients may start looking at additions such as in-law suites, to accommodate aging parents they don’t want to see in retirement or long-term care after deadly COVID-19 outbreaks.

Even if COVID-19 is eventually eradicated, he pointed out, “something else may show up next year, or the year after.”

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