Although March 2020 was one of the busiest months in Montréal’s residential real estate market, the Québec Professional Association of Real Estate Brokers (QPAREB) reports that the COVID-19 pandemic contributed to a slowdown in the second half of the month.
“In Québec, Montréal is the CMA that is most affected by the spread of the virus, due to the city’s greater exposure to international trade and the size and density of its population,” said Charles Brant, Director of the QPAREB’s Market Analysis Department. “As a result, this market is exposed to psychological stress caused by stricter distancing measures and greater economic uncertainty. These factors help explain the faster and more pronounced drop in transactions compared to other regions, notably that of Québec City.”
The relatively high level of activity in March was due to the conclusion of transactions initiated earlier in the year. In addition, three consecutive drops in interest rates (150 basis points) boosted the real estate market in March, bringing rates to levels that are comparable to those seen in 2008 during the last financial crisis.
“In contrast to what we’ve been seeing since the start of the year, April and May are expected to be among the least active months recorded for a spring season since the start of the millennium,” said Brant. “In a context where uncertainty about the economic outcome of this crisis is very high, we can expect buyers and sellers to remain on the sidelines. However, far from being in a downturn situation, the market will, rather, be on pause.”
In total, 5,907 residential sales transactions were concluded in March 2020, a 4 per cent increase compared to March of last year. Still, this was the 61st consecutive month of sales growth. For the first quarter of the year, 14,662 transactions were concluded in the Montréal CMA, a 13 per cent increase compared to the first quarter of 2019.
The areas of Laval, Vaudreuil-Soulanges, the North Shore and Saint-Jean-sur-Richelieu stood out with particularly strong sales increases of 18, 16, 14 and 9 per cent.
In contrast, the Island of Montréal registered a significant drop in transactions (-5 per cent), while sales were unchanged on the South Shore.
Sales increased for all three property categories across the CMA. Sales of single-family homes (3,348 transactions) rose by 6 per cent while sales of condominiums (2,089 transactions) grew by 1 per cent. Sales of plexes (466 transactions) jumped by 12 per cent.
The median price of single-family homes across the CMA continued to rise sharply, increasing by 10 per cent to reach $365,000. The median price of condominiums also rose significantly, jumping by 16 per cent to reach $287,000.
The median price of plexes (2 to 5 dwellings) reached $610,375, an increase of 22 per cent compared to March of last year.
In March, there were 14,070 active residential listings in the Montréal CMA. This represents a 37 per cent drop compared to March of last year.
The number of new listings fell by 22 per cent, which is consistent with the beginning of a wait-and-see attitude by sellers in the context of uncertainty and an expected marked slowdown in the real estate market. The social distancing measures put in place by the provincial government are the main cause.
“While activity on the resale market slowed somewhat in the Montréal CMA in March, price growth acceleration continued in a market that is still extremely tight, and was accompanied by a significant drop in interest rates,” said Julie Saucier, president and chief executive officer of the QPAREB. “The context we are going through will at least have the advantage of protecting Montréal from runaway price increases, as was the case in other Canadian markets. It will also guarantee greater price stability over the medium term as we emerge from the crisis.”