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A real estate sign stands outside a home in Ottawa on March 1, 2021.Justin Tang/The Canadian Press

With low interest rates on mortgages, bubbly job stats and a crunch on housing supply, buyers and sellers in Ottawa are navigating a never-before-seen real estate market.

“It’s just wild,” says Geoff Walker of Walker Real Estate Group.

The lockdown caused by COVID-19 has meant people are less likely to list their properties for sale, but current buyers (some of whom, Mr. Walker says, are continuing their search from last fall) keep coming online. Construction in the city is also falling victim to a material shortage, Mr. Walker says. Timelines have been bumped to 18-24 months from 12-18 months for new builds, according to Mr. Walker, and the demand is so high for homes that one homebuilder – Cardel Homes – just started a blind online auction for buyers to bid on three new builds.

“You’re literally locking down the supply chain for real estate too,” Mr. Walker says of the pandemic’s impact. “And it takes time for the housing inventory to be replenished.”

Mr. Walker says in February there was a 38-per-cent supply shortage as compared to October of 2020. That caused sale prices of residential properties in the city to be sold for, on average, 116 per cent of asking.

“When you put a restriction on the marketplace with pent-up buyer demand,” he says, “it’s just a platform for immense trajectory.”

This has left some buyers wondering what more can they do in order to buy a home in Canada’s capital.

Scott Hewton, a project management consultant and house flipper, spent almost three months trying to secure a property. He finally beat out seven other offers for a home in Ottawa’s west end. He says at one point in his search he overbid by more than $100,000 on a home but lost out to someone who offered $256,000 over the asking price.

“There were some [homes] with 20-25 bids and you just shake your head wondering how you can compete with that,” he says. “As a flipper it is extremely difficult to compete against someone who is willing to overspend on their family home or a rest-of-their-life home.”

Debra Wright, the president of the Ottawa Real Estate Board, calls the current situation in the city “unprecedented.”

She says the ongoing stresses have made transaction process difficult for the mental health of both buyers and sellers. There’s also the financial burden, Ms. Wright says, of paying for a property inspection for upwards of 10 different homes before getting an offer accepted – although many sales are now being accepted with no conditions applied at all.

“We’re just seeing prices and price gaps between list price and sale price that we’ve never seen before,” Ms. Wright says. “[Agents are] frustrated. Their clients are frustrated. And sometimes their clients are looking at the agents wondering, ‘Well what are you doing wrong here, you can’t get me a property.’ And it’s not their fault.”

Vince Caceres, the owner of a downtown Ottawa bike shop, has been looking for a home to buy with his partner since last spring in the Westboro and Glebe neighbourhoods. They’ve only put one formal offer down (they were one of 14 bidders and lost) but have looked seriously at many others.

It’s reached a point, Mr. Caceres says, where buyers need to add 20 per cent on top of whatever the listing price is. He believes it will be at least another year before they are able to get into a home without getting into a hard-to-manage financial situation.

“The way things are going … A, I don’t know if it’ll cool, or B, maybe we’ll just have to bite the bullet and save even more money,” he says. “We’ve saved a considerable amount of money already but you’re kind of laughing at yourself saying, ‘is that still not enough?’”

Additional competition for Ottawa’s homes, Ms. Wright says, is coming from Toronto-based investors who can get more for their money in Ottawa.

Benjamin Tal, deputy chief economist at CIBC, says it’s not surprising people are fleeing the big city to get a more affordable home in a place like Ottawa – given how many people are now encouraged to work from home.

The average home price in Canada’s capital is $580,000, according to 2020 year-end statistics via the Canadian Real Estate Association. That’s a record high for Ottawa, but only about half the average price of a home in Toronto, which sits at $1.025-million.

“Every crisis is a trend accelerator,” says Mr. Tal of Ottawa’s red-hot real estate market during COVID-19. “This is not very different.”

Mr. Tal says despite the Canadian job-loss numbers through the past 12 months, a large segment of Ottawa’s population was “untouched financially” by the pandemic. They are sheltered by working in the public service or tech, an industry Mr. Tal says has actually benefitted from the crisis.

More than 23 per cent of those employed in Ottawa work in public administration, according to Statistics Canada. The city also boasts four post-secondary institutions and numerous embassies, while tech jobs make up 9.9 per cent of total employment – double the Canadian average, according to a report from CBRE.

The large employment base with stable and secure jobs are trying to take advantage of lower mortgage rates – a scenario Mr. Walker, from an agent perspective, calls, “a perfect storm.”

Mr. Tal believes the demand for homes in Ottawa will soften as interest rates stabilize, while Ms. Wright says it’s likely the market will remain as-is for about six months.

Some people in the city have lucked out, but their stories are rare.

Katie Hession – a social media content creator – and her husband, purchased a semi-detached home in Old Ottawa South for less than $500,000 seven years ago. They saw their neighbour get more than $700,000 for their home last fall and decided they would try to sell with their kids getting older and their space feeling tighter during the pandemic.

In what she calls a “complete unicorn situation” they were the only offer on a property about 10 minutes from their current home and they got it. Their old home sold over asking.

Ms. Hession says they have already completed a few renovations on their new home. Despite her agents telling her she could make some “serious cash” if they flipped it, they would still have to try to find a place to live in a market that’s even hotter now than it was at the end of 2020.

She says if they had waited even a few months (they closed in September) they wouldn’t have decided to sell.

“The market, the way it is right now,” Ms. Hession says with a laugh, “scares me.”

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