Homes are selling fast in Montreal these days. It’s no surprise that this is putting pressure on buyers to act more quickly and offer more money than they might have in the past. Yet on the other side of the coin, the red-hot market is bringing new challenges for sellers, and realtors too.
Paradoxically, the record-low inventory of homes for sale is discouraging many would-be sellers from listing their homes, because they fear they won’t be able to find another home to buy.
According to vice president and general manager of Royal LePage in Quebec Dominic St-Pierre, the problem is that many homeowners who want to move are waiting to list until they find a home to move to.
“They say, ‘I don’t want to put my house for sale because I know it’s going to sell in two weeks and I haven’t found the house that I’m looking for,’” St-Pierre said. “Meanwhile they’re looking for properties, but their house is not on the market. If 1000 people do that, it generates a lot less properties on the market and it just accelerates the inventory problem.”
Real estate is a momentum business, St-Pierre said — and the market is accelerating. If Montreal starts to see double-digit price increases, it will lure more investors to buy property here, he said, triggering a new wave of speculative buying that could create a real estate bubble.
”We’re not there yet. But if the market continues to accelerate and the inventory continues to go down, we’ll start seeing that in the near future.”
It’s likely the shortage of homes for sale in Montreal will continue in the near future, St-Pierre said. A market forecast for 2020 prepared by Royal LePage notes that a critical mass of the large millennial generation are now at an age when they are having children and preparing to buy or upgrade their homes, while healthy rates of immigration and interprovincial migration are also increasing the number of potential buyers on the market.
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Low interest rates and a growing number of government programs aimed at making home ownership more accessible for middle-class Canadians will continue to stoke the fire. Yet construction of new homes is anticipated to decline in Quebec over the next few years, according to the latest forecast from the Canadian Mortgage and Housing Corporation.
Royal LePage predicts Montreal home prices will rise faster than all other major cities in Canada.
The result? Royal LePage predicts Montreal home prices will rise faster than all other major cities in Canada. The brokerage expects the appreciation rate in Montreal will reach 5.5 per cent in 2020, which would bring the median price to $457,900.
While realtors are doing brisk business in this market, St-Pierre said this is also creating new challenges. Buyer’s agents are struggling to find homes to show their clients, and when there is a match, the pressure to offer quickly can create tensions between brokers and buyers, he said.
St-Pierre also said the hot market can put a strain on brokers’ relationships with their sellers too. Home owners who want to maximize their gains often want to list for top-dollar, yet in today’s market, it is often a better strategy to list at a competitive price in the hopes of sparking a bidding war, said St-Pierre. If you hope to sell for $600,000, for example, it may be better to list at $550,000 and hope buyers will bid more, than to list for $650,000 if you are willing to accept less.
“It’s all about getting eyeballs on your property,” he said. “People will look for properties between $300,000 and $600,000. If it’s listed at $650,000, they will never see it. People are expecting right now to pay listing price or over asking price.”
