Ottawa Investment and Income Property update, lack of property for sale
I recently had discussions with other Realtors who have a specialization in these properties, and although I've been a Realtor for 17 years (since 1990) I was most interested in opinions from those people who were in this business since the early 1980's.
We were discussing that we all represent a group of investors from the "buy, fix, and flip" group, to the duplex buildings, to the 20 unit buildings, and up. As a general comment we all discussed the lack of good product on the market and some of the frustration of our investor clients. Much of the product has deferred maintenance issues and/or profitability issues and/or they are non-conventional buildings.
This is statistical. In 2006 there were 165 multi unit buildings (buildings with 5 or more units) sold in Ottawa. This is a 10 % decrease from 2005. Initially they sold in about the same amount of time as 2005 but by the end of the year the average days on market for one of these buildings to sell, was 56 days. This is a decrease of almost 20 % versus 2005. They good ones were being snapped up. I personally was involved in many $500,000 to $1.5 million dollar offers last year in which these buildings were sold within 48 hours of being on the market and they had from two to eight offers on the building.
This is anecdotal and conjecture by us Realtors. What is going on? Where are the good buildings? Why does it seem most listings are in Vanier? Why are prices on good conventional buildings making them unprofitable.
In the early 1980's until 1985 ish buildings were escalating in price until the good inventory was exhausted. The new owners held on to their investments until they started to refinance the properties between the late 1980's until 1991 ish. They got second and third mortgages.
From about 1990 (the year I became a Realtor) through most of the decade was a "challenging" market. The new over financed owners from 1985 began to sell off their inventories. The new buyers from the 1990's have now also retained their buildings and little new came on the market from early 2000's. This seems to have slowed to a trickle.
Add into this equation that since the Ontario government introduced rent controls in the early 1970's, construction of conventional buildings, everything from a duplex, triplex, 6 or 12 unit building, came to a virtual halt. Just drive around the city and you will be hard pressed to find any of these buildings built since to 1960's. So good inventory was retained by the mid 1990 buyers and builders were not creating any new inventory.
The trend will come full circle again, like it always does. The point of this overly long email is to address the frustrations many of you are feeling. During every market, there are always good deals being made. They usually go to the most prepared investor, who waits patiently and acts quickly. He/she jumps on an opportunity, controls it in the first day(s) and has a longer term hold portfolio mentality.
I hope this explanation was of some help.
Patrick Walchuk, Sales Representative
Keller Williams Ottawa Realty, Brokerage. Independently Owned and Operated.
Direct 613-788-2127