Hello Goodbye 2023 | A Recap
Let’s talk Ottawa housing market. We hear you, it’s been a wild year. Some may have heard our director of marketing, Kat McGuire, recently took on the role of Sales and Marketing Chair for the Greater Ottawa Home Builders Association (GOHBA). GOHBA has a tradition, Hello Goodbye, it’s an annual event focused on looking at the state of the industry for Ottawa home builders. Kat joined the builder community this week for the 2023 edition, and here is her recap on some of the highlights!
Sponsored by PMA Brethour, Cheryl Rice (President, PMA Brethour Real Estate Group) took the stage first to give us a deep dive into the real estate data. So here we go!
Let’s start with 2022. Cheryl noted it is a year likely to go down in history as having taken both the highest rise and drop in sales. The 2022 market was different than we’ve seen in the recent past. A majority of Ottawa buyers pulled back from the market for the first time in years. Pushed by higher mortgage rates and higher costs of construction, new home sales fell off a cliff. Buyers adopted a “wait-for” attitude. The fear of missing out was replaced with the fear of overpaying causing a suppressed will (and ability) to buy. We saw a shift to more resale given more product availability but the numbers say the state we’ve come to is more or less a balanced market. What does that mean?
A ratio above 60 is a seller’s market. Below 40 is a buyer’s market. This, 2022 is a balanced state in contrast to the continuous and unsustainable rising market previously. Resale inventory has had time to replenish and is expected to steadily increase through spring this year.
The big question is, will prices continue to fall in 2023? And if they do, by how Much?
Should we expect more of the same or can we expect a recovery? Cheryl noted the bulk of the correction is behind us, but we should prepare for more of the same for the first half of this year. Resale has started to see its recovery. New home sales are expected to come back but will be slow. She also talked about immigration and its impact of it on our housing market. But the aggressive immigration influx came at a time when the supply of rental housing was low. This offers an opportunity for builders to add rentals to their portfolios. We are expected to hit new record levels of immigration again this year.
With rising interest rates she noted though we have more affordable home prices, the higher mortgage rates affect buyer ability to afford the purchase price. So she predicted that low supply and lack of demand will keep the market quiet for some time. But we may see floodgates open as early as the end of this year through 2024 making it an overall optimistic view of 2023. Her suggestion, be creative. Give wiggle room to the sales team to be flexible to close, especially through Q1.
David Coletto, one of the founding partners and CEO of Abacus Data, took the baton to talk more broadly about the consumer mindset. And what is pushing (and pulling) buyers in making decisions to buy a home?
Let’s start with the definition of a word, new to us, but has been used by many in the data field to describe 2022, permacrisis. Makes sense when you look back, 2022 was a year of never-ending crises from additional lockdowns, new waves, and a war in Europe, there seemed to be a ton of reasons for consumers to continuously feel cynical, sad, and annoyed. Want to hear the good news? Beginning of 2023 we are starting to see more optimism, hope, joy, and anticipation. Long story short, people want to feel better David explained. They want to focus energy on reconnecting, which means more experience focused in 2023. He noted the CEO of Amex tagged it “revenge vacation spending”, making up for lost time experiencing travel. People are making daily choices to save for these experiences and connection. Connecting with family, taking holidays, and making memories. One prime place to make family memories is at home.
The pandemic shifted the role of the home in our daily life. The consideration of electric vehicles is changing what buyers are looking for in some of the qualities of a home. Though consumers are confused and uncertain about the cost of housing and bracing for more price increases in the cost of housing – but he noted over 70% under 45 years old still want to own a home. So there is conflict in the consumer mindset, but there is also optimism and a want to own a home. His recommendation, understand the market and build what consumers want to buy.
GOHBA is city builders, literally. Jennifer Stewart, founder and CEO of Syntax Strategic, tied it all together with a conversation on strategic communication. Consistently consistent as she calls it. Communications is your brand and your brand is your business. At the end of the day, consumers buy from someone they trust, homes included. So including a communications plan, internal and external, at the executive level ensures strategy is being made with communications, and the consumers’ perception of it, in mind.
With those Hello, Goodbye highlights in mind, we are taking all the lessons learned to capture the optimism for a strong year ahead. Thank you GOHBA for the great kick-off (and perspective) going into 2023!
Author: Kathleen McGuire, Director of Marketing