Metro Montreal
Real Estate Trends and Price Forecast

Montreal, PQ

HIGHLIGHTS

  • Home values in Metro Montreal have been volatile in recent years, see-sawing up and down since 2021. Currently, prices are on an upward trend.

  • More purchases (demand) are being made than in 2023, but demand still lags behind the long-term average, and active listings (supply) exceed it.

  • Multi-factor analysis identifies Metro Montreal as a moderately risky real estate market.

  • Higher mortgage rates are straining home purchase budgets. Promised rate cuts have begun, but they are still relatively high. Some economists believe higher rates are here to stay.

This article covers:

  1. What is the state of the Montreal real estate market?

  2. Which way are prices going?

  3. Should I sell?

  4. Is now a wise time to purchase?

  1. What is the state of the Montreal real estate market?

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Overview of the Montreal Property Market

Metro Montreal is a sophisticated city of 4.3 million people that has earned recognition as one of the top 100 cities in the world, coming in at number 60. Many would say that, culturally, Montreal is the most European city in North America.

The pandemic turbocharged Metro Montreal’s housing demand, and since supply was slow to respond, this lack of supply pushed prices up dramatically. Higher prices pushed many aspiring homeowners further away from their dreams.

Then, post-pandemic mortgage rates increased from under 2 percent to over 6 percent. Higher rates made property purchases even more difficult and forced more potential buyers to sit on the sidelines. However, Montreal prices are still rising despite weaker demand and higher supply. The Montreal house market still favours sellers, but the condo apartment market is balanced.

For those contemplating selling their homes, waiting until next Spring might bring some advantages if you aren’t in a hurry. Spring is the best time to sell because there is typically less supply. Buyer activity in Canada usually peaks in May. Families like to move over the summer so their kids don’t need to switch schools in the middle of the year. This pattern is the typical annual real estate cycle.

On the other hand, prospective homebuyers might consider waiting for a lighter mortgage burden. Mortgage rates are relatively high. Unfortunately, buyers will need patience because rates, even though they have begun to drop, are anticipated to remain higher than average until 2025. The challenge for buyers waiting for lower borrowing costs is that prices continue to inch upward.

Consumer sentiment has taken a substantial hit, and the market fundamentals point toward risk and uncertainty. However, consumer sentiment is volatile and an unreliable predictor of future property price trends.

 

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Metro Montreal Detached House Prices

Montreal house prices are exploring uncharted territory but may be losing steam. It is probably too early to make a call because prices typically soften between August and December.

We believe politicians hope to guide the market toward a typical annual real estate cycle with price growth of 1% to 3% annually— in line with income growth.

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Montreal’s house prices stand out against the declining trend in other major Canadian cities like Vancouver and Toronto. Several factors contribute to this disparity:

  1. Expectations of Limited Supply: Montreal construction is down significantly. In 2022, there were over 40,000 units under construction, and now the figure is closer to 30,000. This could lead investors to conclude that a future supply crunch will supercharge prices.

  2. Steady Demand: Montreal attracts new residents due to its relatively affordable housing and good job opportunities. This consistent demand puts further pressure on the already constrained supply.

Overall, Montreal’s housing market presents a unique picture within the Canadian context. While external factors can influence it, understanding the local supply-demand dynamics, investor activity, and price comparisons is crucial for deciphering its trajectory.

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Metro Montreal New Construction Home Prices

Prices of new homes have plateaued. While the short-term pattern looks more volatile, long-term new and pre-sale prices have been flat since 2022. Pre-sale buyers should avoid paying a premium.

Does this concern you? Read the Pros and Cons of Buying Pre-sale Homes

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The softening demand for new homes has caused many developers to pause new releases, slowing the pace of new supply entering the Montreal market.

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Market Risk

Mortgage Sandbox Analysis shows Montreal is at moderate risk of a significant market correction.

 

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Metro Montreal Condo Apartment Prices

Metro Montreal's benchmark apartment price is flat. The recent imposition of more stringent French language requirements at local English universities will likely negatively impact condo values, often purchased as rental investments.

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Montreal apartment purchases have improved since 2023 but are lower than in 2022 and 2021. Similar to the detached house market, condo apartment listings are growing.

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With more people working from home or hybrid, we expect developers will begin marketing larger (i.e., 2 and 3 bedrooms) apartments to meet buyer preferences. As the supply of more generous floor plans comes to the market, it may depress the values for small floor plan condos.

At Mortgage Sandbox, we would like developers to build 4 and 5 bedroom condos because:

  • Not everyone can afford to buy a house for their family.

  • Canadians who work from home need more room to segregate workspace from living space.

  • Many Canadians with longer working hours find it challenging to stay on top of necessary house upkeep (i.e., mowing lawns, clearing eaves, shovelling sidewalks).

  • Many people prefer to live in higher-density neighbourhoods with all the essential amenities within walking distance.

Metro Montreal Townhouse Prices

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Still a challenge for first-time homebuyers

A Montreal household earning $76,000 (the median Metro Montreal household before-tax income) can get a $260,000 mortgage. If they were to save a $65,000 down payment, they could only buy a home valued at $323,000. The Median condo apartment price is over $400,000, so for them to buy a typical condo apartment, a household needs an inheritance or a very generous gift from family. For most people, that is not possible.

What about the rest of Canada?

Read the Toronto Real Estate Forecast, Ottawa Forecast and the Metro Vancouver Forecast.

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2. Which way are prices going?

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There is a lot of uncertainty in the forecasts for 2024, 2025 and 2026. Many of the forecasters we've surveyed have different expectations for:

There is no consensus among economists.

How do we arrive at our forecast range? Check out our full assessment of the five factors that drive these forecasts. These five forces help explain why several forecasters are anticipating price drops.

 

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At Mortgage Sandbox, we provide a price range rather than attempting a single prediction because many real estate risks can impact prices. Risks are events that may or may not happen. As a result, we review various forecasts from leading lenders and real estate firms, and we then present the most optimistic estimates, the most pessimistic predictions, and the average forecast.

Do you want to learn more about real estate risk? We’ve written a comprehensive report explaining the uncertainty level in the Canadian real estate market.

Our forecast inputs:

3. Should I Sell?

From a seller’s perspective, more changes in the market influence prices downward, so now may be a better time to sell than in two years. The annual real estate cycle usually favours sellers in the first half of the year.

Sellers should always consult a mortgage broker early to prioritize flexible loan conditions and reduce the risk of mortgage cancellation penalties. Find out more about the benefits of a mortgage broker.

Planning to Sell? Check out our Complete Home Seller’s Guide.

 

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4. Is now a wise time to purchase property?

It’s hard to say. Prices have been rising, but interest rates (borrowing costs) are high, and supply is rising, which means prices could begin to fall. It’s almost impossible to time the market. If you are buying your forever home and don’t plan to sell it for ten years, then the risks of buying it now are lower.

Regardless, the annual real estate cycle usually favours buyers in late summer.

If you are considering buying, be sure to drive a hard bargain and pay as close to market value as possible. Also, don’t bite off more than you can chew when it comes to financing.

Are you Planning to Buy? Check out our Complete Home Buyer’s Guide so we can walk you through the end-to-end process and get you ready to buy your new home!

 

Do you have a financing strategy?

Try our strategy assessment to maximize your risk-adjusted investment returns.

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