The Montreal market is leading the way in home sales growth

The latest real estate data put Montreal in pole position for the country's most impressive spring market, and key data suggests a seller's market may persist for some time.

“2023 was a very bad year in Montreal,” said Marc Lefrancois, a broker at Royal LePage Tendance in Montreal. “The upgrade market is dead; People who wanted to sell a smaller house and buy a bigger house backed out. Now they're coming back.”

According to March data from the Canadian Real Estate Association, there were only six regions in the country that saw more than one billion dollars in residential real estate transactions in March: Toronto, Vancouver and the Fraser Valley saw year-over-year declines in dollar volume and sales; on the other hand, Calgary, Edmonton and Montreal jumped higher in these categories.

Sales in the Montreal area were up 14 percent year-over-year in March (from 3,930 transactions to 4,488 transactions) and the dollar volume was $2.6 billion, up 23 percent from 2023. The average sales price also increased by 6.4 percent, from $586,133 to $586,133. $623,820.

By contrast, in Toronto, its sales were down 4.9 percent and dollar volume was down 3.8 percent for the year, though the underlying numbers show nearly 2,000 more sales than last year (and an average sales volume of $5 billion more). price is $1,121,615.)

The only market with more than 1,000 sales was Edmonton, where transactions rose 34 percent to $1.1 billion. However, given Montreal's size (twice that of Edmonton) and average prices (37 percent higher), the amount of economic activity is more significant.

There are obvious reasons for this: a combination of immigration and population growth in recent years and a failure to increase housing supply to meet demand.

“Until we build houses, there is constant fundamental pressure on the market. … That always puts upward pressure on prices,” Mr. Lefrancois said. “What we're seeing from customers now is confidence in the market – and confidence that rates will come down.”

On April 10, the Bank of Canada left its policy interest rate at 5 percent for the sixth time in a row. Gov. Tiff Macklem said a rate cut is “within the realm of possibility” at the next policy meeting in June.

Mr Lefrancois said some “early-bird” buyers were prepared to take on comparable deals, even among the region's most expensive homes, with mortgage rates dropping soon. “In the first two months of the year, transactions over $1 million are up 70 percent,” he said.

Charlize Brant, market analyst for the Professional Association of Quebec Real Estate Brokers, says her province has been less affected by higher rates than others.

“The market is not that sensitive to interest rate hikes,” Mr. Brant said. “Property prices are significantly lower than in other provinces and the mortgage burden is lower in Quebec, so people have less debt than in other provinces.”

Coupled with rising wages and more newcomers to the province, and you have more demand than is in the market until the first quarter of 2024.

However, the first quarter beat Mr Brant's expectations, making it the first quarter since 2021 to deliver double-digit sales growth. The position of being one of the fastest-moving large markets is new for Montreal, and this pattern is repeated in the province's smaller markets, with Quebec City also showing very strong transaction and price growth.

“Traditionally, the Quebec market is more stable than other markets,” he said, but over the past decade, it has seen an increase in demand for real estate, leading to higher Montreal prices and a 16 percent increase in sales so far. of private houses (13,832 so far in 2024) and condominium apartments (5,661 in 2024).

But if more buyers wait for lower rates to hit the market, a spring hike may not be what the Bank of Canada wants to see.

“If homebuyers come back into the market and start pushing up prices, that will put pressure on inflation through higher housing costs, as well as stronger economic activity and less oversupply,” said Farah Omran, senior economist at Scotiabank. “Home sales affect other parts of the economy, so increased sales activity not only increases the housing investment component of GDP, but also increases housing-related spending, such as furniture. Higher economic growth and less oversupply pose a higher risk to inflation and therefore to the rate outlook.”

Royal LePage CEO Phil Soper said his company predicts Quebec will be among the events of 2024, but he noted that whether or not that's good news depends on your perspective.

“In the first two weeks of April, we've seen that trend continue – prices are going up,” Mr Soper said. “Toronto and Montreal are under more demand-side pressure than Vancouver, and even more so than Calgary.”

In its latest quarterly market report, Royal LePage predicts that Toronto's median home price will surpass Vancouver's in the coming year. According to the Canadian Real Estate Association, in March the price difference between Vancouver and Toronto (of all home types) was about $200,000.

“Toronto has some of the most valuable real estate,” Mr. Soper said. “Or (seen) another way, the most inaccessible real estate.”