This summer’s real estate market was HOT HOT HOT! July 2016 was one of the best on record. Though Montreal’s growth was modest compared to our Toronto or Vancouver counterparts (2% growth). The change in the market is sure to have a positive impact on the fall and winter months. In the last year we have seen houses sit longer than previous years on the market. Multiple offers are still out there, but are few and far between. Buyers have gained the luxury of time while sellers have had to learn to buckle down. However, don’t be surprised if we see another spike in sales before a mortgage rate hike by the major banks. Montreal is also experiencing a growth in potential foreign investors. The low Canadian dollar may encourage buyers from the United States to purchase second homes in the Montreal area, as has occurred during past periods of a favourable U.S. exchange rate.
Economic factors supporting the positive Quebec Real Estate Market:
According to Royal LePage Canada
(published July 13, 2016)
Strength in exports to the U.S. is expected to continue to support provincial growth in the remainder of the year in Quebec. Last month Fitch Ratings revised its outlook for the province from “negative” to “stable”, citing Quebec’s diverse economy as a key strength. An increase in full-time jobs and renewed stability and confidence in Quebec’s economy is being reflected in the province’s residential housing sector, particularly in the Montreal region. In the second quarter, the aggregate price of a home in the Greater Montreal Area increased by a healthy 3.5 per cent year-over-year to $344,620, while the aggregate price of a home in Montreal Centre rose 4.9 per cent to a median price of $416,953. This is indicative of a transition in the region, which is currently seeing a trend toward a seller’s market in the two-storey home segment, and a balanced market for other property types. The 2rd Quarter of the year has been full of positivity. The 3rd was great and the 4th can only get better.
• 12,767 residential sales were concluded in the 2nd quarter of 2016, a 2 per cent increase compared to the second quarter of last year.
• This was the 8th consecutive quarterly increase in sales, the longest sales streak in more than fifteen years and the best 2nd quarter sales result in 4 years.
• Sales of single-family homes and condominiums increased by 1 per cent and 4 per cent, respectively, while plex sales (two or more dwellings) fell by 3 per cent.
• Geographically, the South Shore, Laval and the Island of Montréal registered respective sales increases of 5 per cent, 4 per cent and 1 per cent, while sales on the North Shore remained unchanged (0 per cent). Vaudreuil-Soulanges registered an 8 per cent decrease in sales.
• The number of properties that sold for $500,000 or more, all property categories combined, rose by 12 per cent across the CMA in the second quarter of the year.
Who’s buying and what?
The first-time buyer market was active in 2016, and though sales appeared to be down slightly from the previous year, this is likely due to more sales of new builds that are not counted through the MLS system. Sales of homes priced under $300,000 were brisk, driven by low interest rates.
Many first-time buyers purchase homes in the suburbs, and homes near metro and train stations are in high demand.
High inventory characterized Greater Montreal’s condominium market in 2016; at the end of October, there were approximately 14 months of condo inventory on the market. While new starts are down, developments currently under construction are expected to come on the market next year. The higher inventory may cause prices to soften somewhat in 2017.
Last year witnessed some demand from foreign investors. These buyers, attracted to the relative stability of the Canadian dollar and affordability of Montreal’s condo market, tend to choose properties closer to the downtown area. This is true for the previously mentioned U.S. investors looking for a second home or rental property.
Sales of homes priced around $1 million were steady at the start of this year, while homes in the lower-end of the luxury market were slower to sell. Homes in the $1 million plus range tend to be one of two property types. Luxury properties outside of the city centre tend to be 3,000 square foot homes on a large lot with a swimming pool. Within the city of Montreal, luxury homes are smaller, older houses in traditionally upscale neighbourhoods such as Outremont, Westmount and Hampstead.