Real Estate Talk:
Trends in real estate
Where will the demand for housing be next?
By Joseph Marovitch
Prior to the pandemic outbreak, the Montreal real estate market was rising in price at a significant pace. Developers, early on, realized the island of Montreal was quickly running out of space to build and commenced building thousands of condo units. Single home prices were rising as demand increased but inventory decreased. With the price of single homes moving beyond the reach of the average buyer, buyers quickly opted to purchase condos. Eventually, condominium inventory was diminishing as well, causing condo prices to rise.
Real estate investors, whose primary portfolio consisted of multi-residential income properties, started to realize that as single homes and condo inventory was diminishing and prices were rising, people had to live somewhere. Therefore, investors began purchasing as many income properties as they could find. Next, the price per door of residential apartments started to skyrocket. In Côte des Neiges prices per door were approaching $160,000.
If one follows the trend, investment moved from homes to condos, to income properties. As well, before the pandemic, as space to build was limited, investors started to look at the suburbs and beyond the island of Montreal.
Then the pandemic hit, and the economy tanked. Jobs were lost, companies were closing, and household income decreased to the point that tenants were not paying their rent. Landlords were stuck with property, increasing expenses and no income.
The market for income property suddenly came to a halt. It is now moving, but very slowly.
If one follows the trend, investment moved from homes to condos, to income properties. As well, before the pandemic, as space to build was limited, investors started to look at the suburbs and beyond the island of Montreal. Areas such as Boucherville, Boisbriand, Laval and Saint-Jérôme started to look attractive as the city expanded beyond the Saint Lawrence River in all directions.
So, what is the trend now as we battle with COVID-19? In Montreal, restaurants and bars are just now re-opening as are retail stores. Yet, all are having a difficult time. The economy has reopened but the pandemic has not ceased. In every city around the world where the government has decided to re-open, infections have spiked. Many are wearing masks, keeping six feet apart and washing their hands. Many are not. Mostly younger people in the 25 to 35 age range are going to bars, having parties, feeling invulnerable.
Then there are those who think the pandemic is a government conspiracy and will not adhere to any restrictions, even flaunting the wearing of masks in enclosed public spaces. It is amazing that people do not realize something is real until it bites them or the ones they care about, even with the fact that hundreds of thousands have died.
The trend in real estate, for those who do believe the pandemic is real, is to move away from populated areas. The demand for property in the Laurentians and Townships has spiked. There is now a demand to both rent and purchase for the purpose of a second residence and permanent relocation.
‘It is a seller’s market outside the city and for those who have property to rent, demand is there and rising. For those who wish to sell, again, demand is rising.’
The inner city is quieter than ever before, air travel is restricted, and residential summer camps are not operating. These are major indicators as to where demand will be for real estate.
The demand to rent up north and out East is high, but the inventory is low. Those who have homes in the countryside are using them to enjoy and to stay away from populated areas, and avoid infection. Demand to purchase in the countryside is for property removed from populated areas as well.
It is a seller’s market outside the city and for those who have property to rent, demand is there and rising. For those who wish to sell, again, demand is rising.
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Next article: Preparing for the autumn market
State of the market
After months of the real estate market being closed, many buyers are running to find another home. These are buyers who sold their home either before or during the outbreak and have been waiting for the situation to calm down and the market to reopen so they could move on. Before the pandemic, single home and condo inventory was low and prices were high. Now that the market has re-opened, inventory is still low, but demand is urgent, therefore buyers are lining up and multiple offers are taking place. In several cases, property is selling above asking in the $250,000 to $350,000 range.
In the higher range, between February 1, 2020 and July 8, 2020, only 46 homes sold in Westmount, 65 in NDG, 28 in Hampstead, 37 in Outremont. The higher-end property market has been slow and appears to remain so.
‘One would hesitate to state if the market will rise or drop in the future as the future appears somewhat unpredictable. The world is still in the midst of a pandemic that seems to be rising and receding like an ocean tide.’
Various real estate companies will state the market is moving and prices are rising, Economists and the Canadian Mortgage and Housing Corporation warn of a market drop up to 18%. Both statements are possible. The market in the lower range is moving now. The drop may occur once the surge ends for those that had to buy now. One would hesitate to state if the market will rise or drop in the future as the future appears somewhat unpredictable. The world is still in the midst of a pandemic that seems to be rising and receding like an ocean tide.
If the curb of infection reduces and remains low for a period of time, or if a vaccine is discovered and distributed soon, we may be back on course and the real estate market will rise quickly in and around Montreal.
If a second wave or more occurs, then the market will become static until the situation improves. Remain cautious and weigh all the options and possibilities before buying or selling anything.
Stay safe and have a great weekend!
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Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible for, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or firstname.lastname@example.org