Ottawa's September inventory passed its 2016 ceiling. Barely.

Two calls, one release

On September 24 I wrote that if Ottawa's months of inventory climbed past 4.5 in September, August was the start of a real repricing. On October 5 I wrote that if the townhouse reading held at 4.0 or higher while single-family stayed under its 2016 level, the pattern from August against 2016 was real. OREB's September release is out, so here is the score.

Overall months of inventory came in at 4.8, up from 4.5 in August. That is past 4.5, so the first call holds. It is also above September 2016, which OREB prints at 4.6. The ceiling I described in the September 24 post was broken in the very next month.

Checking the 2016 comparison yourself

OREB prints the percent change against September 2016 but not the 2016 counts. Back them out. Active listings are 4,813 and 12.0% fewer than 2016, so 4,813 divided by 0.88 is 5,469 in September 2016. Sales are 1,010 and 15.3% below 2016, so 1,010 divided by 0.847 is 1,192. Then 5,469 divided by 1,192 is 4.59, which matches OREB's printed 4.6.

So the ratio of stock to sales is now 4.8 against 4.6. Small, but August was still under 2016 at 4.5 against 4.6, so September is the month the city crossed. Year to date is a different story: 3.7 months against 4.7 in 2016. One month crossed. The year has not.

Which segments did it

Use each segment's own printed 2016 months of inventory and apply it to this September's sales. That tells you how many listings the segment would carry if it were exactly as loose as 2016.

Single-family: 4.8 months in 2016 times 535 sales is 2,568 listings. Actual is 2,378. That is 190 fewer than 2016 would imply, with a current reading of 4.4. Still tighter.

Townhouse: 2.7 months in 2016 times 329 sales is 888. Actual is 1,303. That is 415 extra listings, or about 1.3 months of townhouse sales. In August the gap was roughly one month.

Apartment: 7.2 months in 2016 times 121 sales is 871. Actual is 883, so apartments are 12 listings above 2016 at 7.3 months. In August they were 121 listings below. The segment that was tighter than 2016 a month ago has now caught up.

Add the three: 190 below, 415 above, 12 above is 237 above. Against the 4,327 listings the three segments would carry at their 2016 ratios, that is 5.5% looser. Townhouses and apartments pushed the city over the line. Single-family held it back.

Scoring the townhouse call

I said a townhouse reading under 3.5 would mean August was a blip, and 4.0 or higher with single-family under 2016 would mean the pattern holds. OREB prints townhouse months of inventory at 4.0. The unrounded figure is 1,303 divided by 329, which is 3.96. That passes by a hair, and I would rather you know how thin it is. Single-family at 4.4 against 4.8 clears its half easily.

One thing I did not expect. The August post on September 24 had townhouses jumping from 3.0 to 4.1. In September they eased to 4.0, while single-family rose from 4.0 to 4.4 and apartments from 6.3 to 7.3. The segment that moved first has stalled. The others are catching up to it.

Same ratio, different market

A 4.6 in 2016 and a 4.8 now are not the same market. Back out September 2016 new listings: 2,927 divided by 1.362 is 2,149. Sales of 1,192 over 2,149 is 55.5%, which is the sales to new listings ratio OREB prints for that year. This September the ratio is 34.5%.

In 2016 the city turned over more of what came on. Median days on market was 39, but more than half of new listings became sales. Today new listings are 36.2% above 2016 and sales 15.3% below. The stock looks similar. The inflow behind it does not, and about 1,600 listings quit without selling this September on top of that.

What I would do with this

If you are listing a townhouse or an apartment, you are competing against more supply than 2016 had, and benchmarks are saying the same: townhouse benchmark $546,500, down 2.2% on the year, apartment $380,800, down 6.1%. Price off the last 30 days of closed sales, not summer. If you are selling single-family, the segment is still tighter than 2016 but its benchmark fell 3.0% in a month, so do not assume that means leverage.

If you are buying, the townhouse and apartment gap is where negotiating room shows up first. I sell houses. I do not give mortgage, tax or legal advice, so questions about financing belong with your lender or broker and your lawyer.

What would prove me wrong

The October release lands in early November. It will print October 2016 for comparison. If overall months of inventory drops back under that October 2016 figure, September was a one month crossing and I will say so here. If townhouses fall under 3.5, the stall I flagged was the start of a reversal.

Want a read on your own street and property type? Call me at 613-262-6545 or write fil@613realtor.ca and I will pull the comps with you.