Wow! I love it. Montreal real-estate is flying and shows no signs of letting up. 

We were in limbo for almost twenty years compared to the rest of North America. Montreal was a buyer’s market. Prices were relatively inexpensive compared to other major urban areas. And now, its catch up time…

Yes, according to Briana Tomkinson of The Gazette, “More demand + less supply= Higher prices.”

Higher Prices= Opportunity!

If you are a home owner, then you probably have to hang in there and let the market run its course and continue to rise. Your home value will grow and you always have the enjoyment of the home. Of course, you also have costs for taxes, mortgage and maintenance. But, hopefully, the enjoyment equation is still strong and outweighs the costs…it usually does.

If you are a home buyer, it gets tricky. When is the right time to jump in? If you are trying to time the market and it does keep on rising, then you will keep on timing and keep on waiting and not jump in now and maybe never. If you search out different pockets of the city and the suburbs, you will find certain neighborhoods that may still be a good ‘bargain.’ You may find a fix-me-upper that you feel needs renovations and re-design. This creates value and that personal touch to help make your enjoyment equation promising. You may have a great deal of work to do or a longer commute to work, but a starter home allows you to jump into the market. You can always trade up later. As long as you are in the game, your value rises with the market and that proverbial dream house can still be in your crosshairs.

If you are an investor, then you also are trying to time the market. But, if the cash flow is positive, then it is a no-brainer. Cash flow is your rental income less expenses and mortgage payments, plus renovations. If the cash flow is negative, you have to look at the total expectation of increase in property value plus the mortgage repayment of principal during the anticipated time period that you will own the property.

The magic of investment in real estate is that you do not need 100% of the capital of the investment. You put down 20-25% of the required capital and the bank lends you the rest, so your return is many fold. As your property value increases, it also increases on the principal owed to the bank, but they are only owed their outstanding principal, not the increase in value. Furthermore, your tenants help you pay down your mortgage over time. Pretty good plan.

Historically, real estate always rises over the long run, but look before you leap.

House prices likely to climb through 2020, CMHC says

The boom in condos and multi-family rental buildings will also continue. In other words our housing hot streak shows no sign of cooling.

Briana Tomkinson, Special to the Montreal Gazette

Updated: November 9, 2018

The boom in condos and multi-family rental buildings will also continue. In other words our housing hot streak shows no sign of cooling.

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

Gavin Correa
November 19, 2018

5 Replies to “Montreal Real Estate: Opportunity!”

Leave a Reply to Sniptools.Com Cancel reply

Your email address will not be published. Required fields are marked *