Market Outlook

With every new year comes a new set of factors that affect real estate prices. 2017 will be impacted by US politics and exchange rates, changes to Canadian Mortgage rules and of course the classic supply and demand chain reaction.

Areas like the Eastern Townships and the Laurentians might see growth compared to past markets

Drastic Change in the United States

As Canadians, we are often bystanders caught in the aftershocks of what happens in the United States. The strong American Dollar and political instability could prove to be very beneficial for some Canadians. While the Foreign Buyer’s tax in Vancouver might keep US buyers away, other urban centers might see benefits. Where we are most likely to see those benefits in Quebec is in vacation properties. According to the Phil Soper, CEO of Royal LePage, Americans are the largest foreign buyers of Canadian property. “Part of the reason is the relative affordability of our recreational properties based on the strength of the American dollar. That means areas like the Eastern Townships and the Laurentians might see growth compared to the quiet past markets.

Changes to Mortgage Lending:

The new mortgage rules announced by the federal finance minister in the fall of 2016, including the introduction of a mortgage rate stress test for mortgages with a low loan-to-value ratio (down payment of less than 20%), will have a direct impact on the number of first-time buyers in Québec,” explained Paul Cardinal, Manager of the QFREB’s Market Analysis Department. In addition, mortgage rates were increased a quarter point in December, with warnings that 3 more rate increases would follow this year. That means prospective Canadian homebuyers should expect mortgage rates to get more expensive in the coming year, though many market commentators have expressed doubts that it will move that fast.

Supply and Demand

Owners of Condo properties will need to hunker down again this season. An over supply of condos for sale in the city center is still causing slow sales and price drops. This new reality is making it harder for investors to flip properties and find tenants. The other large factor that is affecting investors is the municipalities creating bylaws against AirBnB.

Getting into the spring market early might be the perfect opportunity for vendors. The spring market should be a strong one provided that rates don’t change again and buyers don’t cool off.

Although the year 2017 is expected to be more modest than 2016 in terms of property price increases, the market situation could be advantageous for sellers of single-family homes. This will be seen particularly in Greater Montréal, in areas such as Hampstead, Westmount and TMR, where currently properties are limited and buyers are looking to get into the market. Getting into the spring market early might be the perfect opportunity for vendors. The spring market should be a strong one provided that rates don’t change again and buyers don’t cool off.