A Year In Review: Montreal Real Estate Market Highlights 2018

A recap of all the notable trends, events and statistics that influenced Montreal’s housing market this year.

January – New mortgage regulations launched, intended to cool down overheated Canadian  markets.

As of the 1st of January 2018, all Canadian buyers borrowing from a federally regulated lenders were subject to the OSFI Mortgage Stress Test, including insured borrowers (those with a down payments of 20% or more.)

February – Montreal’s market shows strong gains all around

Meanwhile, the Canadian government unveiled its Federal budget with new measures that directly affected the Real Estate Market, such as affordability and rental market supply.

Montreal is a seller’s market across most property categories, with the exception of the condominium market, which is still in balanced market territory.

Along with a sharp decrease in active listings, Montreal’s market has seen a drop in its “average selling time” across the board. A low “selling time,” or “days on market,” is a good indication of heated conditions, which could stem from high demand, low inventory, high consumer confidence, or a combination of all three.

March – The stress test takes effect in Vancouver and Toronto

The Canadian Real Estate Association (CREA) updated their residential housing market statistics on March 15. The new report expected home sales and prices in Canada to fall over the course of 2018.

  • A 6.5% decrease in Canadian home sales was recorded between January and February.
  • Actual (not seasonally adjusted) activity decreased by 16.9% year-over-year in February.
  • The national average sale price in February decreased by 5% year-over-year.

April – Montreal is shaping up to be Canada’s next hot housing market

Montreal real estate transactions increased by 10% this month while sales activity continues falling in Toronto and Vancouver.

Still, the degree of vulnerability remained 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.

May – Montreal is now firmly in a seller’s market, across all categories

Bidding wars have, at this point, increased in occurrence.

According to the Quebec Federation of Real Estate Boards (QFREB), the number of sales completed over asking price has been increasing in all metropolitan areas in Quebec over the past year.

June – Interest rates are on the rise, making it even harder for first time buyers

Prospective buyers scrambled to lock in a mortgage rate as the Bank of Canada announced its second interest rate hike.

July – Is Montreal overheating?

In July, CMHC announced that Montreal’s real estate market was showing signs of overheating.

Should rapid price growth continue, it could trigger the price growth acceleration alert in the next HMA report. That being said, Montreal still faces a low relative degree of vulnerability to market instability when compared to other Canadian metropolitan cities.

Montreal’s condo supply also hit an 8 year low this month, further pushing up prices and competition.

The downward trend of active listings continued into July, perpetuated by a seller’s market in which demand outpaced supply.

August – Montreal promises to improve supply in the rental market.

Montreal’s housing prices show no indication of slowing down, due in part to dropping inventory and accelerated demand. Buyers who have been edged out after the implementation of a stress test earlier this year are likely to step back into the market during the fall and winter of 2018.

The completion of large construction projects in the summer of 2019 could taper down the condominium market.

Montreal’s Mayor Valerie Plante suggested that instead of imposing new taxes, Montreal should focus on increasing the supply of housing to keep prices in check. One of her campaign promises was to incentivize developers to set aside 40% of the units in a new development for social and affordable housing.

September – Duplexes and multiplexes overtake condos as the most popular property type.

‘Plexes Are Officially The Most In-Demand Property Type In Montreal: until very recently, Montreal’s condo market led the way when it came to real estate sales activity, largely outpacing the number of transactions in the single family home and ‘plex markets. Condo builders have struggled to keep up with the demand for new construction projects, as rising prices and interest rates push buyers to look for more affordable housing options.

That trend changed course in September – according to Centris statistics for this month, ‘plexes experienced the greatest growth in sales (+14%) across the CMA, followed by condos (+12%) and the recovering single family home market (+5%).

October – Sales keep falling in other metropolitan markets

Tougher mortgage regulations are continuing to decrease purchasing power and slow down sales, according to CREA’s October real estate report.

Sales activity fell in half of all Canadian markets in September, dropping 0.4% between August and September. Sales are 8.9% lower than they were in September last year.

Meanwhile, Montreal ranked third in a list of Canada’s hottest real estate markets –  based on price change over the past 12 months. In first and second place were Vancouver and Ottawa Gatineau.

November -The 2019 forecasts are in.

CMHC projects two more years of growth for Montreal’s real estate market.

We can also expect vigorous construction in the condo and rental apartment segments. Real estate sales will continue increasing until 2020. Market conditions will continue to favour sellers, which means that prices will continue growing in response to heavy competition. Growth in the average price of homes will be higher than the annual average of the last few years, which was about 2.5%.

December – Bank of Canada holds off on further rate hikes.

Household credit and regional housing markets appear to be stabilizing following a significant slowdown in 2018. BOC seems to be monitor the impact of rising rates and tighter mortgage rules on builders and buyers with caution – for now, it will be holding its interest rate at 1.75%.

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