The real estate market is beginning to return to more balanced activity in some places, although after two years of rising prices it is far from where it was before the pandemic.
“We’ve really seen a change over the past few weeks: there are fewer multiple listings, homes are staying on the market longer, prices are coming down a bit, and we’re seeing negotiations again,” says Matthieu Jodoin, real estate agent RE/MAX in Gatineau, Outaouais.
One-on-one team warfare, dozens of offers to buy in a matter of hours, no-visit or no-visit purchases: the health crisis has seen the real estate market flare up across Quebec.
“During COVID, we could have 80 calls for a house or have offers up to $180,000 over sales price, that was insane,” said Geneviève Grandmont, real estate agent at Via Capital in Estrie.
lull
But with the significant increase in interest rates, the market is beginning to calm down, confirmed several experts.
number
of sales
-18%
number of sales
-18%
MEDIUM PRICE
single family
+18%
SALES TIME
single family
Sep 2022
43 days
2021: 46 days
MEDIUM PRICE
apartment
+15%
SALES TIME
apartment
Sep 2022
49 days
2021: 55 days
SOURCE: APCIQ
In Rimouski, in Bas-Saint-Laurent, the market is slowing down, confirms Danie Truchon, real estate agent in the region for several years.
“The market is still excellent here, but what is certain is that the phone is ringing a lot less than during the pandemic,” she explains happily.
The same story on the Lanaudière side, adds Tristan Bouchard.
“People are starting to buy a little less right now as interest rates go up,” observes RE/MAX Crystal broker.
On the half way
Located halfway between Montreal and Quebec, Mauricie has been a preferred region for many city dwellers looking to get out of the big cities thanks to telecommuting.
“Even though traffic stays pretty much the same, we’re finding more of what we had before, particularly in terms of selling times. During the pandemic we were able to sell in a week, now it’s closer to 30 days on average,” notes Kenny Hamel of RE/MAX in Francheville.
In addition, it is also one-upmanship that is gradually disappearing, many brokers are finding.
“There are still some because it is still the strategy of some brokers to activate visits and offers with a very, very low price, but it becomes dangerous because when [les vendeurs] if they don’t get the price they want, they’re missing out on their marketing,” says Eryck Véziau, RE/MAX agent in Sainte-Dorothée-Laval.
more logical
In Montreal, however, the phenomenon is beginning to unravel.
“We still have properties that are being sold in multiple listings, but it’s on a case-by-case basis. Not all houses are overpriced. The market is becoming more logical and that’s good news for buyers,” said Simon Bellemare, real estate agent at RE/MAX in Montreal.
It’s the same on Montreal’s south shore, warns Sasha Dusseault of Montérégie’s RE/MAX Extra, although multiple deals remain a reality for certain sectors.
“That’s not far from Montreal, the market is still very strong. There are still times when we’re faced with a dozen bids and have to beat them by $50,000,” she said.
MARTIN JOLICOEUR
Journal
The Bank of Canada’s five consecutive rate hikes since early 2022 will have had the clear effect of distracting borrowers away from adjustable rate mortgages.
“The luck has turned. Fixed-rate mortgages are becoming popular again,” says Hugo Leroux, president of Groupe Hypotheca, a major mortgage brokerage firm.
Taking advantage of historically low interest rates, borrowers have massively turned to variable rate mortgages in recent years. This was certainly the case for half of the new borrowing, says Mr. Leroux.
More recently, however, new buyers are embracing fixed-rate mortgages, a way he thinks they can find some stability in a rapidly changing market.
Governor’s Warning
In September, the central bank increased its key interest rate by three-quarters of a point (0.75%) to 3.25%. It was the fifth consecutive rise, after 0.25%, 0.50% and 1% earlier this year.
Like the Federal Reserve Bank of America (the Fed), the Bank of Canada is trying to curb inflation, bringing it down to 2% per year. In June inflation was 8.1%. In September it fell slightly to 6.9%.
The impact of COVID-19, ongoing supply chain disruptions and the war in Ukraine “continue to dampen growth and push up prices,” Gov. Tiff Macklem said. In the same breath, he warned that further increases were needed to meet his goals.
semitone change
If the fixed-rate mortgage regains popularity in such a context, we will find that, unlike in previous years, borrowers are opting for shorter maturities, namely three years instead of five.
After opting for variable rates, many borrowers are now opting for the safety of fixed rates for a few years (two to three years), while giving themselves the freedom to negotiate their contract should rates fall quickly thereafter.
Depending on the financial situation of the individual, this strategy could prove advantageous, believes Mr. Leroux. According to most economists, including Hélène Bégin of the Desjardins Group, interest rates could fall again from the end of 2023.