There’s a feeding frenzy on new listings in Montreal, thanks to
pent-up buyer demand following the month-long pause on real estate
showings in Quebec due to COVID-19.
Bidding wars are now breaking
out over modest bungalows and homes are selling over the asking price
within a week of hitting the market. Realtors also report a surge in
sales activity in
recreational property hotspots such as the Laurentians and the Eastern Townships, as well as small towns at the edge of the city.
According to Daniel Dagenais, managing broker for Sotheby’s International Realty Quebec, the lineup of buyers has grown since
sales paused in March,
yet uncertainty about the economy has caused some would-be sellers to
hold off on listing. The result has created an imbalance in the market,
with a big pool of desperate buyers all vying for the same few homes.
Consumer confidence is a critical “X” factor in real estate economics.
“It’s not just having a good job and good money, if you’re uncertain
your level of trust is low,” Dagenais said. “You could decide that it’s
not time to make a move and just wait.”
Real estate activity
resumed May 11 after more than a month on lockdown. According to Centris
data, although the volume of sales in May dropped by 41 per cent
compared to 2019, the median price of a single-family home in the CMA
increased by 9 per cent to $370,000.
The drop in sales is because
there are so few homes on the market, not a lack of interest from
buyers, realtors say. While there’s a trickle of new supply now coming
on to the market, when the pandemic hit there was already a shortage of
homes for sale.
According to Royal LePage broker Sean Broady, buyers are lining up to buy everything from starter homes to luxury listings.
“People are worried about
a possible second and third wave of the virus,” Broady said. “But they’re not downsizing. They’re upgrading.”
Before
COVID-19, the hottest markets in Montreal were tony boroughs close to
town. Now, some of the most vibrant activity is in markets on the
outskirts of the metropolis.
“I’ve never seen it busier, which has
taken me by surprise,” said Anne-Marie Ashcroft, a broker with
Berkshire Hathaway Home Services Quebec.
Ashcroft specializes in
selling high-end homes on the outskirts of the city, in Hudson,
St-Lazare and Rigaud. She’s getting two to three times the number of
calls she’d expect on her listings, mostly from buyers looking to move
away from the city.
Broady, Ashcroft and Dagenais have all observed the same trend: after
months of being sequestered at home, many families have decided they
want to buy a home with more room to cocoon. They want a yard where
children can play, a pool or patio for entertaining friends, or room in
the basement for a home gym.
After months of
working from home at kitchen tables,
others have decided they really do need two home offices. Those whose
employers are receptive to allowing staff to continue working from home
on an ongoing basis have also realized they no longer need to factor in
commute time when choosing where they want to live, which has made it
more realistic to live an hour or more outside of Montreal.
“People want more space,” Ashcroft said. “COVID has been a big
reassessment. People are looking a lot at quality of life, spending time
with their families and working from home. We’re seeing all these
changes in our life being closely reflected in the real estate market.”
Dagenais
said he thinks the hot market will begin to cool in the coming months
as more homes come on the market. The lockdown has caused many people to
take stock of their lives, he noted, and may cause more people to make
the kind of big life changes that trigger a need to move: separating
from a partner or moving in together, having a baby, or inviting elderly
family members to move in, for example.
“For real estate brokers, there will be a lot of activity,” he said.
And while buyers right now may be a mix of desperate souls who had already sold or
given up a lease
just before COVID-19 hit, along with those confident enough to make big
changes in turbulent times, in the coming months it is possible there
will be a wave of homeowners who are forced to sell in order to recover
from the economic hit of losing work or closing a business due to the
pandemic.
On Tuesday, the Canada Mortgage and Housing Corporation
predicted real estate prices in Canada’s big cities will fall over the
next couple of years due to large drops in income and employment.
In Montreal, employment declined by 18 per cent. Dagenais noted that
while the federal government’s mortgage payment deferral programs and
special unemployment benefits have softened the financial impact of
COVID, at some point these programs will end.
“There’s no gift
from the banks, it’s just a deferred payment and the interest keeps
accumulating,” Dagenais said. “At some point the bank will say it’s time
to pay. I have the feeling that in September, October we should see an
increase of sellers.”
Yet even if prices decline in the short term
here, the CMHC forecasts a relatively quick rebound. By 2022, home
values are expected to increase again, and could even exceed
pre-pandemic levels.
Sacha Brosseau, who launched the new Berkshire Hathaway Home Services
Quebec real estate brand in the midst of the shutdown, said he remains
confident the housing market can recover from the shock of COVID-19.
“From
a real estate standpoint, all that COVID did was put everything on
pause,” Brosseau said. “It was like one big pause button. I am very
optimistic about the future of Quebec in real estate, and also very
optimistic that everyone will get out of this in a positive way.”
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