real estate | The housing market corrects faster than expected

Prices in Quebec have started to fall

Posted at 5:00 am

Andre Dubuc

Andre Dubuc
The press

As interest rates rise, the housing market is quickly being rebalanced, according to July resale market statistics released on Thursday. Prices started falling in Montreal, two months later than Toronto and Vancouver. And that is just the beginning.

Growth in the number of homes for sale accelerated last month, and sales continued to decline. As a result, home prices in the Montreal region fell 5% from their peak in April and May. And that is just the beginning.

The Desjardins Group, which expected a 12% cumulative price drop in Quebec in June, is now forecasting a drop of about 17%, says Hélène Bégin, senior economist. The price declines will last until the end of 2023.

“What is impressive is how quickly the housing market in Quebec went from overheating to returning to equilibrium,” she explained of the adjustments to her forecasts.

So far, the price decline in Quebec is just under 2% from the peak, while it is 13% in Ontario and 9% in British Columbia. “Quebec’s correction started two months later than those two provinces. We’re just beginning to see the start of price declines in Quebec,” Frau saysme Begin.


INFOGRAPHIC THE PRESS

The residential real estate market

Sharp increase in the number of properties for sale

Statistics on the residential real estate market in the Montreal Census Metropolitan Area (CMA) are compiled from the Centris database and are published by the Association professionnelle des courtiers immobiliers du Quebec (APCIQ).

In July, Montreal’s CMA saw 3,080 residential transactions, down 18% from 3,772 transactions in July 2021. All housing categories are affected (houses, condos, plexes) and all geographic sectors, including the exception of North Shore .

“We are still at levels close to what we experienced between 2017 and 2019,” Charles Brant, economist at APCIQ, said in an interview. There is nothing catastrophic. We are still at a good transaction level. But compared to what we know [au début de 2022], we’re really not here anymore. Cases of one-upmanship are practically a thing of the past, he adds.

The increase in active offers continued in June in the greater area for the sixth month in a row. Registrations totaled 12,668, a 28% increase from July 2021.

With interest rates rising, buyers are finding it difficult to meet the criteria that Mr. Brant says explain the drop in demand. With the stress test required by the Office of the Superintendent of Financial Institutions, borrowers today should be able to take out a mortgage based on an interest rate of 7-8%.

Everything is set for a price drop, and it has already started. In a market where there is no overbidding, there is a sliding effect. It’s possible that by the end of the year we’ll see a rapid drop in prices like we’re seeing elsewhere in Canada.

Charles Brant, APCIQ economist

“A normal correction,” he emphasizes after the crazy overtaking episode earlier this year.

The average home price in the Montreal CMA for July was $550,000, up 10% from the July 2021 average price, but down 5% from the July, April, May peak of $580,000.

Elsewhere in Quebec, the story is similar. The extent of the slowdown varies from region to region. “Less resales and more listings, all of these markets are going to follow this dynamic, it’s unstoppable,” says Mr. Brant.


PHOTO MARCO CAMPANOZZI, THE PRESS

In July, there were 3,080 residential real estate transactions in the Montreal area, down 18% compared to 3,772 transactions in July 2021.

In Canada

The Toronto and Vancouver housing markets slumped further in July, with sales and home prices falling for another month as mortgages become harder to obtain and buyers wait to see where prices can fall.

In the Toronto area, home resales fell 47% in July from the same month last year and a seasonally adjusted 7.3% from June, according to the Toronto Real Estate Board. In the Vancouver area, resales were down 43% year over year and 23% lower than in June, according to the local real estate agency.

Home prices also continued to fall in the country’s two most expensive markets, down 13% in Toronto and 12% in Vancouver.

With the Canadian Press

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