Montreal real estate: House prices likely to climb through 2020, CMHC says
For years, Vancouver and Toronto were the stars of the Canadian real estate market. Prices were skyrocketing, and buyers were in a fever to outbid each other. Meanwhile, Montreal just kept trucking along, prices increasing modestly if unambitiously.
Now, it seems, it’s our time to shine.
Montreal’s housing market started picking up toward the end of 2015 and has been gaining momentum ever since. According to the most recent forecast from the Canadian Mortgage and Housing Corporation (CMHC), released Wednesday, the market here is far from peaking.
In Vancouver and Toronto, CMHC expects both housing starts and sales to slow over the next few years. In contrast, Montreal’s strong employment growth is expected to stimulate demand through 2020, leading to an ever-lower inventory of single family homes for sale.
According to the report, prices in Montreal are likely to keep rising, and rental rates as well. The boom in condo construction and multi-family rental buildings will also continue. In other words: Montreal’s housing hot streak shows no sign of cooling.
Although prices are climbing, Montreal is still considered a relatively affordable market. Unlike Vancouver and Toronto, the rise in home prices in Montreal has remained in line with economic fundamentals. In its market outlook report, CMHC said overvaluation is not a concern yet.
According to Brad Henderson, president and CEO of Sotheby’s International Realty Canada, there’s a lot of room left for prices to grow in Montreal. The median price of a single-family home in the Montreal area may have risen six per cent year over year, but it still remains at a relatively affordable $335,000.
“It’s a global city, a world-class city, that is continuing to come into its own. When people look at the price of real estate in Toronto and Vancouver and other cities around the world, people realize what a bargain it is in Montreal,” Henderson said.
Demand for Montreal real estate is continuing to grow, while supply is dropping. The Quebec Federation of Real Estate Boards reports that Montreal has now seen 17 consecutive quarterly increases in residential sales. Meanwhile, the number of listings has been dropping for 12 consecutive quarters.
More demand + less supply = higher prices. And indications are the trend isn’t likely to reverse anytime soon.
And indeed it is already slim pickings for buyers in certain parts of Montreal. In October, another CMHC report found in certain sectors of the Island of Montreal, including in the southern part of the West Island, the South West, Rosemont, Villeray, Notre-Dame-de-Grâce, Montreal West and Nun’s Island, there were four or fewer sellers for each buyer.
Although condo construction is ramping up, supply is still not meeting the demand in the hottest sectors of the city, like Montreal’s downtown. According to data from Altus Group, a record-setting 3,000 new condo units went on the market in the greater Montreal area last quarter, but almost half are already sold.
The CMHC outlook predicts the average price growth between now and 2020 will beat the annual average of the last few years, even if an anticipated rise in mortgage rates cools demand.
Overall, it’s looking like a good time to be a homeowner in Montreal. And unlike Vancouver or Toronto, it is still possible for Montrealers who rent to buy a home of their own if they wish.