A seller’s market: Home prices forecast to keep climbing in Montreal
Expect another year of soaring prices in Montreal’s housing market, which might push buyers to the suburbs of the island, according to the latest real-estate forecast.
In December 2018, it was estimated that the median selling price of properties would increase by three per cent in the Montreal area, but Royal LePage’s house price survey released on Wednesday is estimating a 4.5-per-cent increase.
Dominic St-Pierre, vice-president of Royal LePage in Quebec, says the revision is somewhat conservative as the median selling price for homes might increase even more.
“It’s all about the offer and the demand,” St-Pierre said. “Two years ago, a property would sell within 90 and 100 days of being on the market, but in the last year properties have been selling within 70 to 75 days of being on the market.
“Houses are selling quickly because there’s not enough of them to supply the demand. So there are a lot of people who are looking to purchase houses, but there aren’t that many houses for sale,” St-Pierre said.
Since properties are staying on the market for shorter periods, buyers are jumping all at once with their offers on the same listing, which leaves less room for negotiations, St-Pierre said. He added many buyers are putting in offers above the asking price of a listing, which is their way of ensuring their offer is chosen by the seller.
In other words, the market is extremely competitive for buyers.
“Ten years ago, it was totally the opposite,” St-Pierre said. “There were a lot of houses on the market, but there weren’t that many potential buyers and that’s why prices were remaining pretty much flat.
“The market was pretty strong last year, and it’s hotter this year because the fundamentals are there to make the market really good.”
Extremely low interest rates and a great economy with a low unemployment rate are factors contributing to the hot market, St-Pierre said.
But the main difference between the market this year and last year is the smaller inventory.
“There are almost 20 per cent less properties on the market right now than there was at the same time last year,” he said.
The centre of Montreal is where the market is hottest — Ville-Marie, Outremont, Rosemont, Plateau-Mont-Royal and the Town of Mount Royal. However, the median selling price of properties in the west and the east parts of the island are also increasing.
“The REM is coming to town,” said St-Pierre, referring to the Réseau express métropolitain’s estimated impact on real estate in the suburbs of Montreal.
He said buyers will take into consideration the location of the future REM stations when looking for a property in the suburbs.
Time to sell or buy?
“You should not sell right now because the market is hot or buy because the market is hot,” St-Pierre said. “You should sell or buy if it’s the appropriate time for you to do so.”
If you’re in the market to buy, St-Pierre said you should assess your priorities and secure financing before you start looking.
“And the less conditions you put in the offer, the more chances you have for your offer to go through.”
And if you are thinking about selling a property, it is a seller’s market, St-Pierre added.
In April 2018, 3.4 per cent of buyers on the island were foreign buyers and St-Pierre estimates that statistic is now closer to four per cent. St-Pierre said the increase affects the market because the more properties foreign buyers purchase in Montreal, the fewer there will be for locals.
“They usually look at Vancouver and Toronto, but Montreal is becoming a real destination for them, too,” St-Pierre said. “Now Chinese buyers are the first (foreign) demographic that are purchasing homes in Montreal.”