A construction surge is needed to restore housing affordability in Montreal, says broker Royal LePage.
Housing affordability in Montreal has deteriorated since the start of the COVID-19 pandemic, a new report shows.
Residential real-estate prices in the Greater Montreal area soared 30.6 per cent between the fourth quarters of 2019 and 2023, broker Royal LePage says in its Price Survey and Market Forecast, released Monday.
Although the median price of a single-family detached Montreal-area home dropped 2.5 per cent in the last three months of the year, it nevertheless rose 4.7 per cent from 2022’s final quarter to reach $629,700, Royal LePage data show. Fourth-quarter condominium prices rose 1.1 per cent year-over-year to $450,200.
As a result, many Montrealers are suffering from “buyer fatigue, even discouragement,” he added. “People often say that the housing market is doing well — but for who, exactly? For the person who owns real estate, or for the one who wants to buy?”
Multiple increases in the Bank of Canada’s benchmark interest rate during the past 22 months have put a damper on real-estate activity in Montreal and elsewhere by pushing borrowing costs higher.
And because many five-year mortgage holders are facing renewals, the toll will only get heavier. A December study by the Bank of Canada found that without any income growth, the median borrower may need to dedicate up to four per cent more of their pre-tax income to interest payments by the end of 2027.
Some 30,171 residential properties in Greater Montreal were listed for sale last month, industry data show. While that’s almost double the December 2022 total, the number remains 47 per cent below the average of the past decade, Royal LePage says.
Quebec may need to build as many as 1.1 million housing units by 2030 to restore affordability in the residential market, the Canadian Mortgage and Housing Corporation estimated in a report published in September. The figures are based on population growth scenarios and residential construction projections.
Unfortunately, construction in the province isn’t keeping pace with residential demand. Housing starts in Montreal plunged 58 per cent during the first half of 2023 to 5,927 units, the lowest level in 26 years, CMHC data show.
Prospective homebuyers could get some relief in 2024 if interest rates start heading down. Many economists are now predicting that the Bank of Canada will keep its benchmark interest rate at five per cent in the first half of the year before starting to make cuts in the last six months.
Even so, St-Pierre cautions, lower interest rates alone won’t fix the affordability issue.
“In the long term, we are really going to need to solve the problem of housing inventory,” he said. “Lower rates are not going to make housing more affordable. The problem of affordability will only be solved through strong measures to increase the housing stock in Quebec and Canada. Without this, I don’t see how housing prices could drop significantly.”
Aggregate home prices in Greater Montreal are projected to climb five per cent year-over-year by the fourth quarter to $595,140, Royal LePage says in its updated 2024 forecast. The firm calculates aggregate prices by using a weighted average of the median values of all housing types collected. The numbers include both resale and newly built house prices.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
The Canadian Press. All rights reserved.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
The Canadian Press. All rights reserved.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
The Canadian Press. All rights reserved.
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