Curious about what Q4 looked like in the Montreal real estate market? We have a full breakdown of the most important stats right here.
First off, let’s compare Q4 2022 against Q4 2021. Overall, sales were down, and prices have also started to come down. On the flip side, inventory is up, and properties are staying on the market for longer.
Let’s dig deeper into those sales figures. Single-family home sales are down by 32% compared to Q4 2021. Condo sales dropped by 40%, and multi-family homes saw a 52% drop in sales. It’s important to note that these figures have nothing to do with pricing – just the number of properties being sold!
These numbers completely align with what we expected to see: as interest rates have risen, consumer confidence has pulled back. That means properties are staying on the market for longer and buyers are more hesitant to jump in. Some buyers have simply been priced out, which has contributed to the price drop that we’ve been seeing across Montreal.
Compared to Q2, which is the highest that home values have climbed to date, there’s been a dropoff. On the island of Montreal, we saw a pricing drop of almost 11.5% between Q2 and Q4. That traces the very peak of the market all the way down to the lowest point that we’ve seen.
In terms of condos on the island, we saw a 5.4% dropoff, and multiplexes on the island dropped 9.3%. Both of these categories also hit their peak in Q2 2022.
We aren’t particularly worried by these stats. This is something we expected to happen, and precisely what the Bank of Canada was hoping to achieve: to slow down consumer spending, counteract inflation, and cool the market off a little bit.
Many people are concerned about this 11% pullback, but unless you happen to have bought in February and need to sell today, this isn’t really affecting the bulk of the population.
The reality is, we’ve seen prices increase significantly over the last five years. Single-family homes have gone up 62%. We’ve seen condos go up 50%, and over that same five-year period, multiplexes from two to five units have gone up 55%. So, if you bought a property any time before February 2022, you probably have a decent amount of equity.
The reality is that with real estate, it’s not like you’re buying a stock. The plan is not typically to buy and sell right away. The people who are feeling a bit of a crunch right now are flippers who bought a property at the peak, expected peak returns, and now they have to sell the home in a market that’s suddenly slowed down.
Typically, we tell our clients they should be looking at a three- to five-year period minimum for a real estate investment to make any sense. The historic average of price increases in the Montreal market is 3%. So, between closing costs, brokers, commissions, and everything else, you want to make sure you have time on your side so that you’re earning the revenue you were aiming for.
The “so what?” of these statistics is this: as expected, prices have cooled off. The Bank of Canada just released another increase of 25 basis points, so everybody on a variable mortgage is going to have a slightly higher payment for the next few months, which will help bring inflation down further.
What can you expect? We should see prices peel back a little bit more before they rebound. That means if you’re a buyer, now is a super exciting time. We’re going to negotiate great deals. All of a sudden, it’s our time to shine.
That’s your market update. If you have any questions, reach out to our team. We constantly have a finger on the pulse of what’s happening in Montreal and its surroundings, so ask us anything!