Metro Montreal
Real Estate Trends and Price Forecast
HIGHLIGHTS
Home values in Metro Montreal have been volatile in recent years, see-sawing up and down.
Since 2020, Montreal homebuyer demand has dramatically decreased. It looks unlikely that 2024 demand will match 2017.
A multi-factor analysis identifies Metro Montreal as a moderately risky real estate market.
Budgets for home purchases are still under strain due to the significant increase in mortgage rates since their historical lows.
This article covers:
What is the state of the Montreal real estate market?
Which way are prices going?
Should I sell?
Is now a wise time to purchase?
What is the state of the Montreal real estate market?
Overview of the Montreal Property Market
Metro Montreal is a sophisticated city of 4.3 million people that has earned recognition as one of the top 100 cities in the world, coming in at number 57. Many would say that Montreal is the most European city in North America in terms of culture, architecture, and landmarks.
The pandemic turbocharged Metro Montreal’s housing market, driving up prices at a remarkable pace and causing aspiring homeowners to be pushed further away from their dreams. And just when they thought things couldn't get more difficult, rising interest rates now force more potential buyers to sit on the sidelines.
For those contemplating selling their homes, time is of the essence. Early Spring is the best time to sell because there is typically less supply.
Prospective homebuyers might consider waiting for a lighter mortgage burden. Mortgage rates are relatively high; unfortunately, patience will be needed because rates are anticipated to remain high until mid-2024.
The market fundamentals are riddled with risk and uncertainty as consumer sentiment has taken a substantial hit. But remember, consumer sentiment can be volatile and has proven to be an unreliable predictor of future price trends.
Metro Montreal Detached House Prices
Let's delve into the world of Metro Montreal’s detached house prices. Since reaching its peak in the spring of 2022, prices have dropped significantly. The market is volatile and unpredictable, and that is a problem. While the government managed to shield the real estate market from the recession begun by the pandemic, the market is now grappling with the weight of higher interest rates.
Our politicians are striving to return the market to a more typical real estate cycle, where prices grow consistently and modestly at an annual rate of 1 to 3%, in line with income growth. They are orchestrating efforts to guide the market toward this balanced trajectory without much success.
Demand in Montreal is low. Many people want to buy a home, but affordability is very low, and this is reflected in the number of successful purchases. Significantly fewer people can realize their homeownership dream in these market conditions.
New homebuyers can’t afford to get on the homeownership ladder and high rates trap existing owners. Families that want to upgrade to a larger home can’t qualify for a new mortgage at the current rates.
Meanwhile, the total active listings are trending upward. They are at their highest level in three years.
Metro Montreal New Construction Home Prices
Prices of new homes have dropped. Some homebuyers might find they will have paid much more than the most recent buyers in their development. Based on economic fundamentals, it seems likely that they will continue to drop.
Does this concern you? Read the Pros and Cons of Buying Pre-sale Homes
The softening demand for new homes has caused many developers to pause new releases. The pace of new supply coming to the Montreal market has slowed.
Market Risk
Based on Mortgage Sandbox Analysis, Montreal is at moderate risk of a significant market correction.
Our platform matches you with local, pre-screened, values-aligned Realtors.
Shared values make better working relationships.
Metro Montreal Condo Apartment Prices
Metro Montreal's benchmark apartment price is flat. The recent imposition of more stringent French language requirements at local English universities will likely negatively impact condo values, which are often purchased as rental investments.
Montreal apartment purchases are lower than in the previous three years, while supply is growing.
With more people working from home or hybrid, we expect developers will begin marketing larger (i.e., 2 and 3 bedrooms) apartments to meet buyer preferences. As the supply of more generous floor plans comes to the market, it may depress the values for small floor plan condos.
At Mortgage Sandbox, we would like developers to build 4 and 5 bedroom condos because:
Not everyone can afford to buy a house for their family.
Canadians who now work from home need more room to segregate workspace from living space within their homes.
Many Canadians with longer working hours find it challenging to stay on top of necessary house upkeep (i.e., mowing lawns, clearing eaves, shovelling sidewalks).
Many people prefer to live in higher-density neighbourhoods with all the essential amenities within walking distance.
Metro Montreal Townhouse Prices
Still a challenge for first-time homebuyers
A Montreal household earning $52,500 (the median Metro Montreal household before-tax income) can get a $300,000 mortgage. That’s enough to buy a benchmark priced condo, but buying a house is out of reach for most locals.
What about the rest of Canada?
Read the Toronto Real Estate Forecast, Ottawa Forecast and the Metro Vancouver Forecast.
Need a Realtor?
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2. Which way are prices going?
There is a lot of uncertainty in the forecasts for 2024, 2025 and 2026. Many of the forecasters we've surveyed have different expectations for:
Will the federal government achieve its aggressive immigration targets?
There is no consensus among economists.
How do we arrive at our forecast range? Check out our full assessment of the five factors that drive these forecasts. These five forces help explain why several forecasters are anticipating price drops.
At Mortgage Sandbox, we provide a price range rather than attempting a single prediction because many real estate risks can impact prices. Risks are events that may or may not happen. As a result, we review various forecasts from leading lenders and real estate firms, and we then present the most optimistic estimates, the most pessimistic prediction, and the average forecast.
Do you want to learn more about real estate risk? We've written a comprehensive report explaining the uncertainty level in the Canadian real estate market.
Our forecast inputs:
3. Should I Sell?
From a seller’s perspective, more changes in the market influence prices downward so now may be a better time to sell than in two years, and the annual real estate cycle usually favours sellers in the first half of the year.
Sellers should always consult a mortgage broker early to prioritize flexible loan conditions and reduce the risk of mortgage cancellation penalties. Find out more about the benefits of a mortgage broker.
Planning to Sell? Check out our Complete Home Seller’s Guide.
Get a mortgage broker to pre-approve you
Realtors want you to be pre-approved before you look at homes
4. Is now a wise time to purchase property?
It’s hard to say. Prices have been falling, but interest rates (borrowing costs) are high, which means prices could fall further. It's almost impossible to time the market. If you are buying your forever home and don't plan to sell for ten years then the risks of buying now are lower.
Regardless, the annual real estate cycle usually favours buyers in late summer.
If you are considering buying, be sure to drive a hard bargain and pay as close to market value as possible. Also, don't bite off more than you can chew when it comes to financing.
Are you Planning to Buy? Check out our Complete Home Buyer’s Guide so we can walk you through the end-to-end process and get you ready to buy your new home!
How much home can you afford?
Our mortgage calculator takes uses up-to-date mortgage rates and calculates the price of a home you could afford.
Here are some recent headlines you might be interested in:
Bank of Canada: era of very low rates is likely over, people and firms must adjust (Reuters)
Bank of Canada deliberations show some felt rates may need to rise higher (Global News)
Bank of Canada likely done raising rates, to cut by mid-2024 say economists: Reuters poll (Reuters)
Rising rates on homeowners and the shocks that lie ahead (CMHC)
Upcoming mortgage renewals have homeowners concerned (Edmonton Journal)
Canada is in for a cooler winter in real estate as sales slow: CREA (Global News)
Home Prices in Canada Are So Stretched That Even Owners Want Them to Fall (Reuters)
Posthaste: The risk of forced home sales is rising in Canada, warns economist (Financial Post)
B.C. real estate market notches downward amid climbing interest rates, association says (Vancouver Sun)
LACKIE: Bleak times for Toronto real estate market (Toronto Sun)
Calgary Real Estate Board reports 17 per cent increase in October home sales (Calgary Herald)
Vaughn Palmer: End of the line for single-family neighbourhoods in most of B.C.(Vancouver Sun)
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