QUEBEC CITY, Feb. 04, 2022 (GLOBE NEWSWIRE) — The Quebec Professional Association of Real Estate Brokers (QPAREB) has just released its residential real estate market statistics for the Quebec City Census Metropolitan Area (CMA) for the month of January, based on the real estate brokers’ Centris provincial database.
“The Québec City market is starting the year strong, although the number of sales is down for this period of the year compared to what we have seen over the past two exceptional years. The lack of properties on the resale market and the relatively sustained level of single-family housing starts largely explain this situation,” notes Charles Brant, QPAREB Director of Market Analysis. “While overheating of the market continues to persist, it remains under control with overbidding affecting only one transaction out of three over the years, with differences between listing and selling prices often lower than 10 per cent. Thus, the rise in prices remains strong, but contained,” he adds.
In January, sales were down to 684, a drop of 16 per cent compared to the same period last year. Note that January 2021 set a historical record with 817 sales.
Thus, all areas of the Quebec City CMA continue to show a decline in sales, particularly the Northern Periphery with a 25 per cent drop compared to last year, closely followed by the agglomeration of Quebec City (-17 per cent). The South Shore experienced the least significant decrease with a 9 per cent drop in sales.
The condominium category is enjoying great popularity with sales falling by only 13 per cent compared to January 2021. Sales of single-family homes, limited by a low level of available inventory and more intense competition from the new home market, saw an 18 per cent drop in sales. It was the sales of small income properties that experienced the strongest decline (-20 per cent).
Active listings dropped significantly for the 22nd consecutive month for single-family homes (-31 per cent) and for condominiums (-42 per cent) in particular. They dipped by 2 per cent for small income properties.
In very tense market conditions in favour of sellers, prices continue to rise steadily, although plexes are down slightly by 1 per cent ($347,250). Condominiums rose by 9 per cent compared to last year, while the price of single-family homes recorded a robust 15 per cent increase. Median prices thus reached new records for these two categories for this period of the year: $325,000 for single-family homes and $217,000 for condominiums.
If you would like additional information from the Market Analysis Department, such as specific data or regional details on the real estate market, please write to us.
About the Quebec Professional Association of Real Estate Brokers
The Quebec Professional Association of Real Estate Brokers (QPAREB) is a non-profit association that brings together more than 13,300 real estate brokers and agencies. It is responsible for promoting and defending their interests while taking into account the issues facing the profession and the various professional and regional realities of its members. The QPAREB is also an important player in many real estate dossiers, including the implementation of measures that promote homeownership. The Association reports on Quebec’s residential real estate market statistics, provides training, tools and services relating to real estate, and facilitates the collection, dissemination and exchange of information. The QPAREB is headquartered in Quebec City and has its administrative offices in Montreal. It has two subsidiaries: Centris Inc. and the Collège de l’immobilier du Québec. Follow its activities at qpareb.ca or via its social media pages: Facebook , LinkedIn , Twitter and Instagram .
The QPAREB released an important study on real estate overheating on September 13, 2021. This brief was presented to the Quebec Minister of Finance as part of the consultation on the supervision of real estate brokers in the context of an overheated market. Click here to read this analysis (in French).
Centris is a dynamic and innovative technology company in the real estate sector. It collects data and offers solutions that are highly adapted to the needs of professionals. Among these solutions is Centris.ca , the most visited real estate website in Quebec.
If there is anything commercial real estate owners don’t need right now, it’s a banking crisis.
Big owners of property around the country were already under pressure from the Federal Reserve’s aggressive campaign to raise interest rates, which raised borrowing costs and lowered building values. They also had lots of space still sitting empty in city centers as a result of more hybrid and remote work arrangements resulting from the pandemic.
Now they face the prospect that beleaguered banks, especially smaller ones, could get more aggressive with lending arrangements, giving landlords even less room to breathe as they try to refinance a mountain of loans coming due. This year, roughly $270 billion in commercial mortgages held by banks are set to expire, according to Trepp, and $1.4 trillion over the next five years.
“There were already liquidity issues. There were fewer deals getting done,” Xander Snyder, First American senior commercial real estate economist, told Yahoo Finance in an interview. “Access to capital was getting scarcer, and this banking crisis is almost certainly gonna compound that.”
Smaller banks began ramping up their exposure to commercial real estate in the aftermath of the 2008 financial crisis, which was triggered by a housing bust, and stuck with it even after the pandemic emptied out many city-center properties and other forms of borrowing provided by commercial mortgage backed securities and life insurers dried up.
Signature was among the banks that made some of these bets, becoming an aggressive lender in New York City to office towers and multifamily properties. By the end of 2022 it had amassed nearly $36 billion in commercial real estate loans, half of which were to apartments. That portfolio comprised nearly one-third of its $110 billion in assets.
“There’s a lot of commercial real estate that’s been financed over the last few years,” BlackRock Global Fixed Income CIO Rick Rieder told Yahoo Finance on Wednesday. “When you raise rates this quickly, the interest-sensitive parts of the economy, and particularly where there’s financing or leverage attached to it, then that’s where you create stress. That’s not going away tomorrow.” Commercial real estate, he added, doesn’t represent the same type of systematic risk to the economy as housing did during the 2008 financial crisis but there are “isolated pockets that can lead to contagion risk.”
Forced sales of more trophy buildings at large discounts are expected in the coming years as owners struggle to refinance at affordable rates. “Sellers will want the price that everyone was getting [back] in December 2021, and buyers are kind of even afraid to buy something right now cause they don’t even know what the price of these buildings are,” Snyder said.
“Bank lending standards had already tightened significantly over the last few quarters to levels previously unseen outside of recessions, presumably because many bank risk divisions shared the recession fears that have been widespread in financial markets,” according to a note last week from Goldman Sachs. More tightening of lending standards expected as a result of new bank stresses could slow economic growth this year, Goldman said.
But he said regional banks with high amounts of commercial estate loans were not likely to become the next Silicon Valley Bank.
“We’re well aware of the concentrations people have in commercial real estate,” he said. “I really don’t think it’s comparable to this. The banking system is strong. It is sound. It is resilient. It’s well-capitalized.”
The larger commercial real estate world is still absorbing the shock of the Fed’s aggressive campaign, according to Marcus & Millichap CEO Hessam Nadji. The effects may not pose a systemic risk, he added, but they will add to the industry’s many challenges.
“Commercial real estate has been through a pandemic, very rapid recovery, then massive tightening of financial conditions unlike anything we’ve seen in modern history,” he told Yahoo Finance Thursday. “The last three years have moved the industry through a significant rollercoaster.”
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
A few weeks back, I went out on a limb and said that all signs were pointing to the fact the real estate market was waking back up again.
I spoke of houses selling in multiple offers a day or two after going to market. Colleagues around the water cooler who were telling me of clients coming back in out of the wind, ready to think about real estate again.
Buyers were showing a willingness to come in off the sidelines, I said. Could it be that they think the worst is now over?
Well, turns out that theory of mine wasn’t just born of “hopium” — incidentally, my new, most favourite word to come out of the past few months of real estate downtime.
No, no. Hopium be damned — the real estate market is alive again.
By Wednesday of last week — the first days post-March break, which is unofficially the start of the spring market — I personally witnessed four midtown houses go within hours of being listed.
What might we glean from that?
Could it be that people are feeling optimistic?
Clearly consumer sentiment has improved. Though if a year ago someone had told me there could be excitement at seeing rates creep just below 5%, I would have told them to give their head a shake.
But those rates have clearly started to normalize.
Assisted by the fact that markets are evidently now considering the banking meltdown south of the border may serve to bring about the great pivot sooner than late-2024 as consensus had previously thought.
Even the permabears seem to acknowledge we are witnessing a rally of sorts.
And while it’s hard to know why, the reality is that life will always goes on. The three D’s of real estate — death, divorce and debt — are immune to consumer sentiment. And with record lows in transaction volume, there is without a doubt pent up demand waiting to greet spring.
But this appears to be more than that. This seems to also relate to a belief that the worst is now over and while it has certainly been bumpy, better days lie ahead.
NEW YORK, March 24 (Reuters) – An executive who also serves on the board overseeing the New York Federal Reserve warned on Twitter of potentially systemic problems in the real estate finance market and called on the industry to work with authorities to avoid things getting out of hand.
Noting there is $1.5 trillion in commercial real estate debt set to mature in the next three years, Scott Rechler, who is CEO of RXR, a large property manager and developer, tweeted: “The bulk of this debt was financed when base interest rates were near zero. This debt needs to be refinanced in an environment where rates are higher, values are lower, & in a market with less liquidity.”
Rechler said he’s joined with the Real Estate Roundtable “in calling for a program that provides lenders the leeway and the flexibility from regulators to work with borrowers to develop responsible, constructive refinancing plans.”
“If we fail to act, we risk a systemic crisis with our banking system & particularly the regional banks” which make up over three quarters of real estate lending, which will in turn put pressure on local governments that depend on property taxes to fund their operations, Rechler wrote.
The executive weighed in amid broad concern in markets that aggressive Fed rate hikes aimed at lowering high inflation will also break something in the financial sector, as collateral damage to the core monetary policy mission.
The Fed nearly held off on raising its short-term rate target on Wednesday after the collapse of Silicon Valley Bank and Signature Bank rattled markets. The failure of Silicon Valley Bank was linked to the firm’s trouble in managing its holdings as markets repriced to deal with higher Fed short-term interest rates.
The real-estate sector has also been hard hit by Fed rate rises and commercial real estate has also been hobbled by the shift away from in-office work during the pandemic.
Also weighing in via Twitter, the former leader of the Boston Fed, Eric Rosengren, offered a warning on real estate risks, echoing a long-held concern of his dating back a number of years.
Pointing to big declines in real estate investment indexes, he said “many bank lenders will be pulling back just as leases roll, with high office vacancies and high interest rates. Regional bank shock and troubled offices will be negatively reinforcing.”
Real estate woes are on the Fed’s radar, but leaders believe banks can navigate the challenges.
Speaking at a press conference Wednesday following the Fed’s quarter percentage point rate rise, central bank leader Jerome Powell said “we’re well-aware of the concentrations people have in commercial real estate,” while adding “the banking system is strong, it is sound, it is resilient, it’s well-capitalized,” which he said should limit other financial firms from hitting the trouble that felled SVB.
Rechler serves as what’s called a Class B director on the 12-person panel of private citizens who oversee the New York Fed. That class of director is elected by the private banks of the respective regional Feds to represent the interest of the public. Each of the quasi-private regional Fed banks are also operated under the oversight of the Fed’s Board of Governors in Washington, which is explicitly part of the government.
The boards overseeing each of the regional Fed banks are made up of a mix of bankers, business and non-profit leaders. These boards provide advice in running large organizations and local economic intelligence. Their most visible role is helping regional Fed banks find new presidents, although bankers who serve as directors are by law not part of this process.
Central bank rules say that directors are not involved in bank oversight and regulation activities, which are controlled by the Fed in Washington.
Reporting by Michael S. Derby; Editing by Andrea Ricci