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Recent real estate data has put Montreal in the pole position for most impressive spring market in the country, and underlying data suggests the seller’s market could persist for some time.

“In Montreal 2023 was awfully bad,” said Marc Lefrançois, broker with Royal LePage Tendance in Montreal. “The upgrade market was dead; people who wanted to sell a smaller home and buy a larger home, they pulled back. Now they are coming back.”

According to the Canadian Real Estate Association’s March data there were only six regions in the country that transacted more than a billion dollars in residential real estate in March: Toronto, Vancouver and the Fraser Valley saw year over year drops in dollar volume and sales; on the other hand Calgary, Edmonton and Montreal leapt upward in those categories.

Sales volume in the Montreal region was up 14 per cent year over year in March (from 3,930 to 4,488 transactions) and dollar volume hit $2.6-billion, up 23 per cent from 2023. Average sale price was also up 6.4 per cent from $586,133 to $623,820.

By contrast, Toronto saw its sales fall by 4.9 per cent year over year and dollar volume fall 3.8 per cent, even though the underlying numbers show almost 2,000 more sales than last year worth almost $5-billion more in dollar volume (and an average sale price of $1,121,615.)

The only market with more than 1,000 sales to perform better was Edmonton, where transactions jumped 34 per cent to pass $1.1-billion in dollar volume. Still, given Montreal’s size (more than twice Edmonton’s) and median prices (37 per cent higher) the amount of economic activity is more significant.

What’s happening has some familiar causes: the combination in recent years of faster immigration and population growth and inaction on increasing housing supplies to meet demand.

“There is a constant fundamental pressure on the market as long as we don’t build homes. … That’s always going to be putting upward pressure on prices,” said Mr. Lefrançois. “What we see from clients right now is confidence in the market – and confidence [that] rates are going to go down.”

On April 10, the Bank of Canada kept its policy interest rate at 5 per cent for the sixth consecutive time. Governor Tiff Macklem said a rate cut at the next policy meeting in June was “within the realm of possibilities.”

Mr. Lefrancois said some “early bird” buyers are betting on mortgage rates coming down soon and are willing to bid on the relative bargains to be had even among the region’s priciest homes. ”Transactions above $1-million for the first two months of the year were up 70 per cent,” he said.

Charlies Brant, market analyst for the Quebec Professional Association of Real Estate Brokers, points out his province has been less affected than others by higher rates.

“The market is not as sensitive to interest hikes,” said Mr. Brant. “The price level of properties are substantially lower than other provinces and the mortgage burden is lower in Quebec, so people are less indebted than other provinces.”

Couple that with increasing wages and a rise in newcomers to the province and you have more demand than the market was reflecting until the first quarter of 2024.

Still, the first quarter outperformed Mr. Brant’s expectations, making it the first quarter since 2021 to hit a double-digit sales increase. The position of being one of the fastest-moving big markets is a novel one for Montreal, and the pattern is repeating in smaller markets across the province with Quebec City also showing very strong transaction and price growth.

“Traditionally, the Quebec market is more stable, than other markets,” he said, though in the last ten years he’s charted increasing levels of real estate demand and so far that’s resulted in higher prices for Montreal and a 16 per cent rise in sales of both detached homes (13,832 so far in 2024) and condominium apartments (5,661 in 2024).

But if more buyers are waiting for lower rates to come to the market, a spring surge may not be what the Bank of Canada wants to see.

“If homebuyers start jumping back into the market and push prices up, this would exert upward pressure on inflation via higher shelter costs but also via stronger economic activity and less excess supply,” said Farah Omran, a senior economist with Scotiabank. “Home sales have spillover effects on other parts of the economy, so an uptick in sales activity not only increases the residential investment component of GDP but also spending on housing-related things like furniture. More economic growth and less excess supply also pose upward risk to inflation and therefore the rate outlook.”

Royal LePage CEO Phil Soper said his company predicted Quebec would be among the stories of 2024, though he notes whether or not that’s good news depends on your perspective.

“I can tell you that in the first two weeks of April, we’ve seen that trend continue – prices are rising,” said Mr. Soper. “Toronto and Montreal face more pressure from demand side than Vancouver, considerably more, even more than Calgary.”

In its latest quarterly market report, Royal LePage forecast that Toronto’s median home prices will surpass Vancouver’s in the coming year. According to the Canadian Real Estate Association, the gap between prices (of all home types) in Vancouver and Toronto was about $200,000 in March.

“Toronto has some of the most valuable real estate in the positive way,” Mr. Soper said. ”Or [seen] another way, the most unaffordable real estate.”

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