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Montreal VS Toronto: A Comparison For Real Estate Investors (2018)

A comparison of purchase prices, appreciation rates, rental costs and other considerations for investors.

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Although Montreal and Toronto both have thriving real estate markets, they appeal to different types of investors, and the question of which city is “better” tends to spark heated debates between contenders. The two cities continue to compete for the title of Best City in Canada, and outdo each other on different rankings.

When it comes to buying real estate, here are some distinctions to keep in mind while choosing between Montreal and Toronto.


TLDR: Montreal is largely more affordable and offers better monthly cash flow for rental investors. Toronto has performed better when it comes to long term (5-year) price growth. Montreal outpaced Toronto for 12 month price growth. Request a free consultation with an investment specialist in Montreal.


Montreal vs Toronto: Average Real Estate Prices 

According to the latest (October 2018) Canadian Association of Real Estate statistics, the average home price (detached single family home) is $766,300 in Toronto, compared to $350,000 in Montreal. The average Toronto condo costs $703,000, compared to $325,000 in Montreal. An investor can pick up a rental multiplex in Montreal for the average price of $561,000, which is less than a Toronto condo. For this reason, first time Canadian investors or flippers looking for undervalued opportunities are increasingly attracted by Montreal’s real estate market.

Montreal vs Toronto: Appreciation rates and price growth

Toronto’s real estate price growth has surged exponentially over the past five years, prompting the provincial government to pull in the reins with cooling strategies such as the foreign buyer tax. Although Montreal’s price growth has outpaced Toronto’s in recent months, its price growth is comparatively modest, especially when considered over the long term.

The coming year will determine whether Montreal’s current boom is a passing phase, or whether the city will follow Toronto and Vancouver’s lead in becoming a bubble market.

  • Montreal 1 year price growth: 6.28%
  • Toronto 1 year price growth: 2.64%
  • Montreal 3 year price growth: 15.21%
  • Toronto 3 year price growth: 34.72
  • Montreal 5 year price growth: 17%
  • Toronto 5 year price growth: 60.08%

Montreal vs Toronto: Rental Rates

In Montreal, a 2 bedroom condo rents for an average of $1,620 (+11% Y-O-Y), while a 1 bedroom will rent for around $1,310 a month (+4.8% Y-O-Y).

In Toronto, a 2 bedroom condo rents for an average of $2,800 (+15.2% Y-O-Y), while a 1 bedroom will rent for around $2,080 a month (+15.6% Y-O-Y).

Montreal vs Toronto: Cash Flow (A rough calculation for investors!)

Let’s compare carrying costs for average condo investments in the city, with the average income an investor could pull in on a rental investment.

Montreal

Median price for 2 bedroom condos on Montreal Island (source: Centris, November 2018): $340,000

Average rental price for a 2 bedroom condo on Montreal Island(source: Padmapper, November 2018): $1,620 

Estimated carrying costs for a condo costing $340,000: $1,692

  • Interest (current lowest): 3.39%
  • Downpayment of 20%: $68,000
  • Mortgage payment / month: $1342
  • Monthly taxes (average): $300
  • Insurance: $50
  • Total: $1,692

Estimated cash flow / month: -$72 (negative)

Toronto

Median price for 2 bedroom condos (source: Zolo, November 2018): $703,000

Average rental price for a 2 bedroom condo (source: Padmapper, November 2018): $2,800

Estimated carrying costs for a condo costing $340,000: $703,000

  • Interest (current lowest): 3.39%
  • Downpayment of 20%: $140,600
  • Mortgage payment / month: $2775
  • Monthly taxes (average): $300
  • Insurance: $50
  • Total: $3,126

Estimated cash flow / month: -$326 (negative)

Montreal vs Toronto: Cost of Living

The average cost of living is 21% higher in Toronto than in Montreal. While some services are priced relatively equally between the two cities (food and entertainment), Montreal is 38% cheaper when it comes to housing costs, and 48% cheaper when it comes to transportation. (Expatistan). Toronto on the other hand has a higher average income; $3,387.33/month compared to $2,722.76 / month in Montreal.

Montreal vs Toronto: Other Considerations

Toronto’s inner city rental market, rendered unaffordable for most families, is fuelled by professionals and students. Since the city has experienced a boom in new condo projects, buildings in the downtown area tend to be newer constructions. While condominium fees tend to be higher, new buildings offer more of a turn-key investment option.

Montreal’s market is more consistent, with rent caps limiting exorbitant price increases, therefore enabling more stability in investment projections.  The housing market is equally split between homeowners and tenants, assuring a low vacancy rate for owners of income properties. Within the tenant demographic, there are three major segments. Students, both local and international, prefer to rent in neighbourhoods close to the major universities such as the Guy-Concordia area, the McGill Ghetto, and the Quartier des Spectacles. Professionals lean towards the South West of Montreal (especially Griffintown and St Henri), the Downtown core, or Old Montreal. Families and European professionals tend to prefer the Plateau, Little Italy, Outremont, and Westmount.

Thinking about investing in Montreal’s real estate? Request a free consultation (by phone or in person) with our investment specialist.

Services offered:

  • Tailored investment reports
  • Pocket listings
  • Financial analysis of investment opportunities
  • Guided visits in Montreal

This article, Montreal VS Toronto: A Comparison For Real Estate Investors (2018), appeared first on Shupilov News.

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