Montreal Home Prices Could Have The Biggest Drop In 50 Years By The End Of 2020
If the current situation persists through summer.
- A report from Royal LePage states that the Montreal real estate market is holding strong but could see the biggest year-over-year average price drop in 50 years if the economy doesn't "restart" by the fall.
- Housing demand, meanwhile, "will be considerable."
Despite the current situation, Greater Montreal's real estate market is holding strong — for now. According to the Royal LePage Home Price Study and Market Forecast, home prices in Montreal increased by 7.2% overall from the first trimester of 2019 to the first quarter of 2020. Housing demand, meanwhile, is expected to be huge once the ongoing health crisis ends.
Forecasting the rest of the year, however, Royal LePage estimates that, should the situation persist through the summer, the housing market could see an up to 3.5% decline in prices.
But the report indicates that the local market is in a position to rebound.
"Obviously, the duration of the crisis will dictate the extent of the repercussions on the market," said Dominic St-Pierre, Vice-President and General Manager of Royal LePage for the Quebec region.
"Even if some sellers and buyers may temporarily stay away once the isolation measures are lifted, it is expected that demand on the Greater Montreal real estate market will be considerable."
Here's how Montreal's housing market shaped up in the first quarter of 2020, including the rest of the year's market forecasts.
In the first trimester of 2020, the average home cost in the Montreal area reached $441,979.
Two-storey homes saw an 8% increase for a total average of $557,594. Single-storey homes, on the other hand, increased by 6.9% for an average price of $344,043.
The average price of condominium apartments also increased to $344,962, or by 5%.
Three Greater Montreal areas saw the most significant housing cost increases. Montreal-Est grew by 10.2%; the South Shore by 8.6%; and Ville-Marie by 7.3%.
Should the current health crisis persist, Royal LePage forecasts two possible outcomes.
If the economy were to resume by the end of spring, the housing market would remain stable with a slight 0.5% decline in overall cost.
However, if the situation persists beyond summer, Montreal's housing market could experience the "most pronounced year-over-year decline that the [...] area has experienced in the last 50 years."
Royal LePage acknowledges that governments and banks have offered relief by extending the deadlines for property tax payments and lowering the interest rates.
The company hopes that these incentives will help the housing market rebound once all is said and done. Experts are cautiously optimistic about the potential outcome.
"If sales will be temporarily slowed by the pandemic, we do not foresee a significant drop in prices over a long period, since housing is an essential need," said St-Pierre.