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Is affordable housing still on the rise?

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Rumors are swirling on social media (and residential streets): Despite the slowdown in the real estate market, the affordable housing segment will still be up for auction. But on the ground, grass or not?


Affordable, you say?

Photo by Edward Plant-Freshette, La Presse Archives

Can buyers pay even less for forced bidders?

Despite the slowdown in the real estate market, a recent rumor on the streets is that this spring, the affordable housing segment is once again undergoing an upswing.

Is that so?

The first observation is that even though they are called affordable housing, they are still difficult to access. As of April 5, a search on the Centris real estate site showed 97 single-family homes for sale on Montreal Island in the $300,000 to $450,000 range.

There were 324 entries in the $450,000 to $600,000 category.

Many of these 97 affordable properties are located in the east of the island, in the Rivière-des-Prairies and Pointe-aux-Trembles sectors. In that sector, full home renovations in Toronto are still a common find. This explains why buyers can sometimes pay even less for the same type of property, as the renovation process has already been completed.

Let’s see what happens there.

Single family homes for sale on the island of Montreal

$300,000 to $450,000: 97 entries

$450,000 to $600,000: 324 entries

$600,000 to $750,000: 334 entries

$750,000 to $900,000: 349 entries

Source: Centris Platform (April 5, 2023)

On the ground (still muddy)

“Yes, what we’re seeing on the ground offers a lot more, which is said to be affordable,” observes Melissa Lambron, general manager of the RE/MAX D’ICI agency, which covers the eastern end of the island in particular. Montreal and the cities of Terrebonne and Rebenzine.

Photo by Hugo-Sébastien Aubert, The Press

Mélissa Lampron, General Manager of RE/MAX D’ICI Agency

And what is called affordable property in 2023 is not affordable in 2019. Since then there has been an even more significant increase. A first-time buyer with a budget of around $450,000 will still be in a one-upmanship or walk away.

Mélissa Lampron, General Manager of RE/MAX D’ICI Agency

One-upmanship?

There may be a linguistic expansion. Is an active market synonymous with a high bid?

“In fact, Melissa Lampron explains that the appropriate term would be to offer offers or multiple offers at the same time. It does not automatically mean overkill. It does not mean that we will be offered more than the asking price, but often, this equation is made. »

A drop above

A decline in prices has indeed been observed, but it has mainly occurred in mid- to high-end properties.

“For the east end of the island, for a single-family property, we’re talking about a median price of $465,000, but the median price is $515,000,” reports the manager.

“Yes, there is a small price correction. In the sectors you’re talking to me about, we’re losing 2 to 4% in value on average. But it was nothing big and not announced. »

For $400,000 or $450,000 for a property in good condition on the east side of the island or in Terrebonne, Mascouche, Repentigny, there are many more offers if the property is in good condition. Renovation works to be done. I have brokers who have had 5 to 20 offers on a property in the last few days.

Mélissa Lampron, General Manager of RE/MAX D’ICI Agency

Example, April 4

Photo by Hugo-Sébastien Aubert, The Press

Classic Bungalow, 15the Avenue, in Pointe-aux-Trembles

A classic bungalow, on 15e Avenue, in Pointe-aux-Trembles

Built: 1962

5408 feet of land2

10 rooms including basement

Shot in the beautiful season, the street scene shows a typical suburban street lined with mature trees.

Asking price fits our affordable price range of $300,000 to $450,000: $449,900.

towards the south

In the south of the island this time we can see in the Saint-Jean-sur-Richelieu region.

“You hit the nail on the head. Anything under $500,000 is priced right, and we are always in a situation of multiple offers,” confirms Alexandre Desrochers, president of Royal LePage Excellence, an agency based in Saint-Jean-sur-Richelieu and with 42 brokers.

Around this municipality, he estimates that 60% of properties put up for sale are subject to multiple offers.

What’s under $500,000 and still what we call affordable housing, if it’s a good property, well listed, it certainly won’t last long.

Alexandre Desrochers, President of Royal LePage Excellence

However, nothing can be done with the frenzy of the epidemic period.

“It’s not 10, 12, 15 offers anymore. For remaining overbid situations we can talk about one to five offers,” explains Alexandre Desrochers.

However, in a high-bidding scenario, the bonus will be much smaller than it was a year or two ago. “Before, we went $50,000 or $100,000 over price, but we’re not there anymore. These days we’re $1,000 to $10,000 over price. »

Single family homes for sale in Saint-Jean-sur-Richelieu

$300,000 to $450,000: 53 entries

$450,000 to $600,000: 73 entries

$600,000 to $750,000: 56 entries

$750,000 to $900,000: 38 entries

Source: Centris Platform (April 5, 2023)

Fewer bubbles in champagne

The number of registrations in the Saint-Jean-sur-Richelieu region has doubled in the past year. “During the prison, we were at 125 registrations, now we’re around 300,” says Alexandre Desrochers.

“On the other hand, it changes absolutely nothing,” he adds. At 500 impressions and more, we’ll see more presence, but we’re not there yet. »

The president of Royal LePage Excellence predicts that the market will continue to favor sellers for at least another year.

Take for example a property listed at $425,000. We know it’s going to sell for $500,000. Today, that property might sell for $435,000. There is a drop, but only relative to the height of the prison. People are still satisfied with property prices. I call it champagne bubbles: champagne less effervescent. »

But we’re not talking about a real estate bubble yet.

This endearing one-upmanship

Photo by David Boyley, Law Press Archives

Yes, there’s more to come, an analyst bids.

“Compared to last year, the overbought ratio in the overall market is still down, but there is still some overbought, and you should be aware of that,” affirms Charles Brandt, director of the market analysis department. Professional Association of Quebec Real Estate Brokers (APCIQ).

“Really significant overbids, that is, closing sales 10% and above the displayed price, represent perhaps 5 to 10% of transactions, depending on the markets,” he notes.

These multiple and simultaneous offers tend to focus more on assets that trade around the average price of the relevant market.

“Inevitably, this affects the most affordable properties, which above all are put up for sale at a reasonable price, and not overpriced or comparable to some time ago,” he says. brand.

These are ready-made homes, meaning no work is required or really desirable. There’s potential for a one-upmanship there, that’s for sure, because it’s a rare and sought-after product.

Charles Brandt, Director of the Market Analysis Department at the Professional Association of Quebec Real Estate Brokers (APCIQ)

In the Montreal region, price negotiations affect 15 to 20% of transactions, the analyst estimates. “There is still some negotiation in a market that is in a sharp recession,” he notes.

In total, more than 50% are traded at posted prices. But still trading at least 15% higher and 20% lower.

Charles Brandt, Director of the Market Analysis Department at the Professional Association of Quebec Real Estate Brokers (APCIQ)

However, the price has come down in the last one year.

Price

“Single-family property prices in Montreal hit their peak in April 2022,” recalls Charles Brandt.

The median price of single-family homes in the Montreal region fell 5% in March compared to the same period last year, according to the latest data released by APCIQ this week.

A drop, Charles Brand judged, was “not so terrible” compared to the catastrophic predictions.

The median sales price for a single-family home in the Montreal area in March 2023 was $535,000. During the same period, prices for Montreal condos fell 5%, while prices for plexes fell 8%.

Despite rising interest rates, “there hasn’t been a tsunami of new listings coming into the market from people who can’t afford the monthly payments, the analyst underlines. It never happened.”

Instead, the market is crowded with less attractive properties that don’t find buyers.

“Others were able to trade at list price, meaning without much negative negotiation. This is why we now realize that March 2023 prices for single-family homes are not the lowest we knew at this time last year. »

screenings

After a 20.4% decline in 2022, the number of transactions in the Quebec market should decline another 20.5% in 2023, according to a recent TD Bank Economic Services report released on April 4. 6.7% in 2024.

By comparison, Ontario’s real estate market, which fell 32.3% in 2022, is expected to decline another 8.1% in 2023, then recover 18% in 2024.

TD still predicts that average Quebec home prices, which rose 9% in 2022, should yield 4.2% in 2023, then rebound to 1.8% in 2024.

In Ontario, average prices are expected to decline 8.1% in 2023 before rebounding 18% in 2024.

Stephan Terry
Stephan Terry
"Pop culture practitioner. Award-winning tv junkie. Creator. Devoted food geek. Twitter lover. Beer enthusiast."

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