Statistics from the first quarter of activity in Montreal point to a healthy real estate market, fuelled by accelerated sales, rising prices and shrinking inventory. While the national housing market continues to cool in response to the new mortgage stress test, Montreal has reported a multi-month consecutive trend of robust performance in both its residential and commercial sectors.
Here are four figures that show that Montreal’s real estate market is doing well in 2018.
1. Montreal home prices increased by 6.3% y-o-y in April, in contrast to a -11.3% drop on the national level
Canadian house prices have fallen over the last quarter, led by Vancouver and Toronto. Meanwhile, the average Montreal home appreciated by 6.3% in April, led by two-storey single family homes (7.3%). Condo prices rose by 2% to an average of $245,350. The median price of a single family home in Montreal is $317,000 as of April 2018.
2. Sales are also up by 10%, marking the 38th consecutive increase for the city
Sales activity has jumped again in Montreal, according to the QREB’s latest report. This marks the best month of April since 2010, and Montreal’s 38th consecutive monthly increase in sales numbers. Suburban areas in the GMA saw the highest increase; the South Shore led the way at 15%, followed by 13% in Saint-Jean-sur-Richelieu and 12% in Laval. Of the property types, condominiums performed the best with an 18% increase in transactions year over year.
3. Active listings are down 16%, shifting the city into a seller’s market
While sales have been increasing in Montreal during the first quarter of 2017, active listings have dropped by 16% compared to Q1 of 2017. Decreasing supply and increased demand is indicative of a seller’s market, in which a competitive climate (rising prices, bidding wars, and quick sales) is commonplace. The only property category that is still showing balanced market conditions is that of condominiums
4. Nevertheless, the sales-to-new-listings threshold is below the problematic threshold at 65%.
Despite its shift towards a seller’s market, the degree of vulnerability remains low in Montréal’s central metropolitan area. A market becomes vulnerable when prices are overvalued, putting homeowners and mortgage lenders at risk of a housing bubble. According to the CMHC’s first quarter report, the market shows weak evidence of price acceleration and market vulnerability. Montreal’s seasonally adjusted sales-to-new listings ratio was 65%, which is below the problematic threshold.
Evidence of overbuilding on the Montréal housing market also remained weak. Meanwhile, the inventory of unsold condominiums continues to decrease.
Affordability continues to be Montreal’s biggest advantage when compared to other metropolitan areas across the country. At $317,000, the median price of a single family home is a bargain when contrasted with $870,000 in Toronto and $1.4 million in Vancouver.
The city is also enjoying a boost from a strong economy; 105,000 new jobs have been created since 2016, and consumer confidence is at a 15 year high. According to Think Tank Institut du Quebec, Amazon and IBM’s move to Montreal contributed to the surge in employment, as well as Montreal’s rising prominence as an AI hub.
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