The median price of a single-family home in Montreal has increased 59 per cent since 2017, with the biggest jumps happening during the pandemic years.
Montreal real estate has been on a hot streak for more than five years now, and the COVID-19 pandemic has only cranked up the temperature. Stay-at-home orders created new needs chez nous, especially for those living in small spaces. At the same time, the pandemic understandably made some would-be sellers hold off on listing their homes. The result? Bidding wars driving up prices to eye-popping new heights.
Will the trend continue in 2022? According to Michaël Simard, a senior economist responsible for market analysis at the Quebec Professional Association of Real Estate Brokers (QPAREB), housing affordability has become a serious concern that may put a cap on how much higher prices can go.
“The price increases that we’ve seen, especially this year (2021), were extremely substantial,” Simard said. “We’re expecting a moderation of those price increases. We are not expecting a decrease in prices — unfortunately for some buyers — because there’s still a lot of pressure in the market, and the supply is still quite low. This is going to continue keeping pressure on prices to some extent.”
The median price of a single-family home in Montreal has increased 59 per cent since 2017, according to QPAREB data, with the biggest jumps in price happening during the pandemic years:
The 2022 prediction? An increase of just one per cent, to a median price of $498,395 for a single-family home in the Montreal region.
Yet COVID remains a wild card that could upend expectations, as it has for the past two years. Before the pandemic hit, QPAREB economists expected the median price of a single-family home in Montreal to rise by six per cent — not 18 per cent. And at the end of 2020, the association forecast 2021 would see a seven per cent increase, not 23 per cent.
“There’s a lot of uncertainty at the moment,” Simard said.
The Bank of Canada is expected to begin raising interest rates in the second or third quarter of the year to counter inflation. Most economists expect these increases to be gradual, so people with variable rate mortgages should have time to get used to higher monthly payments. The bigger impact will be on buyers and people refinancing fixed rate mortgages.
The QPAREB’s 2022 forecast notes that by the end of the year, increases in the five-year fixed mortgage rate could lead to monthly mortgage payments that are $250 higher than a similarly sized loan taken out in 2021.
“This is, of course, dependent on how the pandemic goes, and whether there’s a major economic shock that comes up,” Simard said.
Higher interest rates would reduce how much people can borrow, which in turn would reduce how much they can offer on a home. The new borrowing caps should help prevent a real estate bubble in Montreal, stabilizing prices, Simard said. While market conditions will continue to strongly favour sellers, it won’t be as easy for buyers to come up with the money to outbid each other.
In 2020, buyers on a budget flocked to suburban and resort markets, driving up sales and prices to unprecedented levels. But moving to the sticks doesn’t offer quite the same value that it used to. While prices are still lower on the other side of Montreal’s bridges, there has been a catch-up, Simard said. For those who cannot work from home indefinitely, increasing transport costs due to higher gas prices will become an important factor to consider — not to mention traffic jams.
“As soon as the pressure from the pandemic goes down, a lot of households will find that it is less ideal to be that far from the office,” Simard said.
The median price of condos in Montreal has not increased at the same rate as that of single-family homes, so they will become an important rung on the property ladder for first-time buyers — and an alternative to leaving the island for many households, he noted.
For comparison, here is the annual growth in the median condo price over the past five years:
In 2022, the QPAREB predicts the median condo price in Montreal will grow three per cent, to $370,800, as more buyers warm to condos.
In 2020 and 2021, Montrealers woke up to the appeal of sleepy small towns. In 2022, some will come to the conclusion that the dream isn’t all it’s cracked up to be.
As in suburban areas, some smaller towns and resort areas don’t have the infrastructure and amenities urbanites expect. Some buyers may also find they dislike being so far from the city, especially if their work requires a regular commute into town.
“We’re not expecting demand to completely die down in those places, of course, but compared to this year (2021), there’s a good chance that there’s going to be a cool-down of interest,” Simard said.
That could be good news for locals. Incomes are generally higher in the city and working from home has enabled urban professionals to take those big-city wages and outbid local buyers in more remote regions. Simard said that has created problematic affordability issues in some towns.
The story of the pandemic may have a few more plot twists in store, Simard noted, any or all of which could affect the real estate market in unpredictable ways.
“ The Omicron variant really put a wrench into a lot of forecasts,” he said.
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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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