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Montreal real estate: Blame home shortage in Quebec on baby boomers
Most Montrealers still want to live in a single-family detached home, yet achieving that dream is becoming harder for many people. It’s not just that prices are rising and mortgage terms are becoming less flexible. In some parts of Montreal, inventory of single-family homes is so low that even those with money struggle to find a place to buy.
One reason: the predicted wave of baby boomers selling their detached homes to move into condos, smaller homes or less expensive areas just hasn’t happened.
A recent survey released by Royal LePage reveals the vast majority of boomers in Quebec have no plans to buy a new home in retirement. Nor do they plan to downsize, buy a property with family or friends, or move to a less expensive city or into a cottage or other secondary property.
According to Dominic St-Pierre, senior director of Royal LePage in Quebec, many boomers here simply like the lifestyle they have and seem reluctant to make a change as long as their health and finances allow them to maintain the status quo.
“Years ago, everyone thought boomers would flee the bigger city and go to the suburbs and buy a smaller house there. The other trend we thought would happen is that they would all go into condos,” said St-Pierre. “What we did not anticipate is that, especially in Quebec, a lot of them are just holding on to their properties and trying to live in that property for as long as they can.”
Compared with boomers in other parts of the country, Quebecers were the least likely to say they had any plans to move at all. Just 12 per cent said they planned to buy a new home in retirement, and almost three-quarters said they had no plans to downsize. Sixty-two per cent of boomers said they would strongly or somewhat prefer to renovate their existing home rather than buy a new one.
Maybe this is because it isn’t until just before retirement that most people finally find themselves living in their dream home.
Another recent survey commissioned by Century 21 found that more than half of Canadians over age 55 say their current living situation is very close to their ideal, compared with 41 per cent of respondents overall. And compared with other regions of Canada, Montrealers were among the most likely to say they were close to their ideal living situation.
The survey also found that the younger you are, the less likely you were to be satisfied with your living situation. While 56 per cent of people 55 and older said their current home was very close to ideal, only 20 per cent of those 18 to 24 and 33 per cent of those 25 to 44 could say the same.
In Montreal, as in the rest of Canada, the single-family detached home is still preferred by most people, especially families with children. Only 27 per cent of Montrealers said they preferred to live in an apartment or condo. But in many desirable neighbourhoods, it’s becoming increasingly challenging for Montreal families to find an affordable detached home.
“The fact that the boomers are staying put means in neighbourhoods where there are a lot of boomers, it creates an effect where prices of houses are going up,” said St-Pierre. “There are a lot of new buyers who want to purchase homes, but there aren’t a lot for sale now.”
Residential Sales in the Greater Montréal Area: Best Month of July in 8 Years
L’Île-des-Sœurs, August 7, 2018 – The Greater Montréal Real Estate Board (GMREB) has just released its most recent residential real estate market statistics for the Montréal Census Metropolitan Area (CMA), based on the real estate brokers’ Centris provincial database. In total, 3,201 residential sales were concluded in July 2018, which represents a 1 per cent increase compared to July of last year and an eightyear high for this month of the year. This is the 41st consecutive month in which residential sales have increased in the Montréal area. Click here to watch the July 2018 statistics video. "After a strong start to the year, sales continue to increase in the Montréal area but at a slower pace. In fact, for the past three months, sales have only increased by 1 per cent," said Mathieu Cousineau, President of the GMREB Board of Directors.
Sales by geographic area Geographically, three of the Montréal CMA's six main areas registered an increase in sales in July. The South Shore topped the list with a 15 per cent increase in sales compared to July of last year. Vaudreuil-Soulanges and the North Shore were the two other areas that posted an increase in sales, at 8 per cent and 3 per cent, respectively. In contrast, sales decreased on the Island of Montréal (-4 per cent), in Laval (-7 per cent) and in Saint-Jean-sur-Richelieu (-24 per cent). For the Island of Montréal, this was the third consecutive monthly drop in sales. Sales by property category For a 10th consecutive month, the property category that registered the largest increase in sales was that of condominiums. In July, the number of condo sales in the Montréal CMA (1,139 transactions) rose by 6 per cent. Sales of plexes with 2 to 5 dwellings (303 transactions) increased by 2 per cent, while sales of single-family homes decreased by 2 per cent (1,752 transactions). Prices All three property categories registered strong price increases in July. The median price of single-family homes across the CMA stood at $336,250, a 6 per cent increase compared to one year earlier. The median price of condominiums rose by 5 per cent to reach $265,000, while that of plexes jumped by 9 per cent to reach $528,500. Number of properties for sale As for the supply of properties for sale, the downward trend continued for a 34th consecutive month. In July, there were 21,230 active residential listings in the Centris system, a 17 per cent drop compared to one year earlier
Montreal is new hot spot for Chinese buyers
Two factors make city attractive: "Its lack of foreign buyer taxes and its market growth story when other parts of Canada are slowing.”
Foreign buyers have become a kind of real estate industry bogeyman: widely feared, with an influence that many analysts say is more mythic than real.
According to the Canadian Mortgage and Housing Corporation, the proportion of buyers from other countries remains too small to be the main driver of price increases. The number of foreign buyers in Greater Montreal is estimated at around two per cent, by CMHC’s reckoning.
However, while the numbers are small overall, it’s disingenuous to say there is no impact. There is no bogeyman, but there is something going on.
A recent report from a popular Chinese-language website for investors in international property, juwai.com, revealed its buyers are now more likely to ask for information on homes in Montreal than in Vancouver.
After new taxes on foreign buyers were introduced in Toronto and Vancouver in 2016, the number of inquiries on Juwai about properties in Montreal spiked by 85 per cent. During the same period, interest in Toronto and Vancouver properties declined, by 25 per cent and 18 per cent, respectively.
Juwai CEO Carrie Law said while some buyers from China are put off by the thought of doing business in a French-speaking province, the lower prices and lack of foreign buyer taxes are big incentives to look past the language barrier.
“Two things distinguish Montreal from other Canadian cities: its lack of foreign buyer taxes and its market growth story when other parts of Canada are slowing,” Law said.
But while Montreal is emerging as the new hot spot for Chinese buyers looking to invest in Canadian real estate, only a tiny percentage of those who are window-shopping for our real estate plan to come here to stay.
A survey of Juwai’s users found that while more than half of these potential buyers were looking to purchase property for their own use, fewer than two per cent of those considering homes in Montreal said they planned to immigrate. One-quarter were looking for investment properties, and 15 per cent said they were planning to buy property for themselves or family members to live in while attending school in Canada.
Realtors and analysts alike have noticed that Chinese buyers aren’t shopping everywhere in Montreal. They tend to buy in specific parts of the city, which — coincidentally or not — are also the areas with the most significant price increases and bidding wars in recent years.
According to realtor Sophie Ou, who specializes in working with Chinese-speaking clients, one of the reasons buying activity is so concentrated is that many buyers coming from China rely on recommendations on internet message boards or advice from family and friends who have already purchased Canadian real estate.
They often have as little as a week or two to shop for a home and make an offer before they have to fly back home, Ou said. Because the pool of homes for sale in preferred areas is limited, when they find a house they like, she said, they are motivated to bid aggressively to seal the deal.
“The price here compared to the price in certain cities in China is really very cheap. From my personal experience, for condos and new constructions, they will just buy with the price determined by the builder,” Ou said. ”Many of them don’t even come here, they just put down the down payment.”