Real estate forecasts for 202102 Feb 2021
2020 was an unusual year – to say the least!
The real estate market has not been immune to all of the turmoil of the past year, but overall, the results are positive.
Of course, real estate brokers had to halt operations in the spring of 2020, but this period of adjustment allowed us to better plan for the recovery. By the summer, real estate activities were back on track.
An exceptional year in 2020
The Association professionnelle des courtiers immobiliers du Québec (APCIQ) recorded 112,476 sales in the province in 2020, an increase of 17% compared to 2019 – this is unprecedented! And this was even though the Québec market saw a 29% drop in listings compared to 2019. On the island of Montréal, the number of real estate transactions remained stable compared to 2019 (+1%). The increases were most marked on the North Shore (+20%) and on the South Shore (+8%). Source : APCIQ
Montreal area real estate market
Change in total residential sales compared to January 2020
Change in current listings compared to January 2020
Change in the median price of single-family homes compared to January 2020
January 2021 is already setting new records in the greater Montréal area. Despite the 25% drop in listings compared to January 2020, sales still increased by 17%. This scarcity of properties for sale only accentuates the market imbalance and inflates sale prices. The median price of single-family homes in Greater Montréal is $434,000, an increase of 23%. For condominiums, the median price is $322,000 (+17%), while for plexes (2-5 units), we are looking at a median price of $650,000 (+14%). Source : APCIQ
This market imbalance has caused a system of overbidding and multiple offers that can seem incoherent at times. In an interview, Julie Gaucher, Vice President of the Sutton Group–Québec, explains that “the time to sales has completely evaporated; a new property listing leads to visits and offers the day after it’s posted for sale, if not the same day.” While this has caused additional stress for buyers this year, sellers were able to benefit. However, sellers, too, have had to pay higher prices when purchasing their new property, because the bidding frenzy affect buyers and sellers alike – unless they opt for a region where the market not as ‘hot’.
Will we see a more balanced market in 2021?
Not exactly. Even today, the inventory of properties for sale on the market, especially single-family homes, remains very low. According to data from the APCIQ, in January 2021, the number of single-family homes for sale in Greater Montréal fell by 51% compared to the same period in 2020. For condominiums, supply has improved slightly, with a 9% increase in active listings. This reduced overall supply will continue to drive up home prices, but could also limit the number of sales this year.
Regions remain popular
Remote work seems to be becoming a long-term option for many households. As a direct result, families and young couples are abandoning their tiny apartments and condos in downtown areas in search of a new ideal: the suburbs and more rural areas, prized for their larger spaces and more spacious homes. In Montréal, more than 35,000 households left the city in 2020. This trend, which has boosted prices in the regions, should continue again this year.
What about the rental market?
The rental market has seen a considerable decline on the island of Montréal. The housing vacancy rate fell from 1% to 6% between May and December, according to the Corporation des propriétaires immobiliers du Québec (CORPIQ). And the effect is even more pronounced in central neighbourhoods, such as downtown, Griffintown or the Plateau–Mont-Royal. The city has lost many of its foreign workers and students, due to limited international travel. AirBnB type rentals are prohibited during the pandemic and as a result, many investors find themselves in a delicate situation, without income. Tourism and immigration will eventually pick up. Foreign students will come back. But between now and the end of the pandemic crisis, could this be an opportunity to sell? Buyers are plentiful and property owners could get a good deal.
Low interest rates, but...
The Bank of Canada intends to keep its key interest rate low and maintain measures to mitigate the impact of the pandemic crisis for as long as it continues. These very low interest rates should support the demand for properties for a good part of 2021. However, banks are becoming increasingly cautious, tightening their criteria and requiring approved appraisals, thus increasing the time it takes to secure financing.
Several homeowners were able to hold out financially in 2020, thanks to deferrals of mortgage payments offered by banks. The government has also injected large sums of money into the economy. But many observers fear that the new restrictions to contain the second wave of the virus might force homeowners to sell as a result of inability to pay. It remains to be seen whether households in more precarious situations will be able weather the storm.
Our advice to buyers
Our advice to sellers
Whatever 2021 brings, our team will be able to adapt to situations and put everything in place to continue to provide unparalleled service to our customers.
Has your situation changed? Do you have a real estate project? Our team can help you see things more clearly or simply answer your questions. Please don't hesitate to reach out to us. Call us at 514 388-9333.