Greater Montreal Real Estate Board

Greater Montreal Real Estate Board
CMHC

CMHC

March 02, 2005 12:06 ET

Greater Montreal Area Resale Market Surfing Near the Peak


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: GREATER MONTREAL REAL ESTATE BOARD

AND CMHC

MARCH 2, 2005 - 12:06 ET

Greater Montreal Area Resale Market Surfing Near the
Peak

MONTREAL, QUEBEC--(CCNMatthews - March 2, 2005) - In the Greater
Montreal area, the final months of 2004, in comparison with the last
months of 2003, ended with a decrease of 7 per cent in the number of
properties (7,871) sold through the S.I.A.®/MLS® network. This
result followed a decline observed in the third quarter, as well.

After having declined slightly (-3 per cent) in 2003, sales went up by 2
per cent in 2004, for a total of 36,022 transactions. "In sum, from a
small decrease to a small increase, the market seems to have reached a
certain plateau. Steady job creation since the mid-1990s and continued
very low mortgage rates are allowing the resale market to surf the wave
near the peak," explained Paul Cardinal, Senior Market Analyst for
Canada Mortgage and Housing Corporation (CMHC).

Since there were slightly fewer transactions recorded in 2004 than in
2002, this result cannot be considered as a record level of activity for
the Montreal metropolitan area. The same does not hold true, however,
for the entire Greater Montreal Real Estate Board (GMREB) territory,
which includes rural sectors where activity has just kept rising. "In
the last four years, the overall increase in sales reached 22 per cent
in Montreal and its suburbs, while the gain attained 81 per cent in the
outlying area. It seems that some households are therefore more inclined
to move further away, since housing is more affordable in the outlying
areas," commented Michel Beausejour, FCA, Chief Executive Officer of the
GMREB.

The small rise in active listings in 2003 significantly picked up the
pace last year and reached 30 per cent. The Island of Montreal, mainly
the central sectors (zones 4 and 5), largely contributed to this
increase, but the suburbs also came into play during the second half of
the year. The rise in the number of condominiums for sale in the North
Shore sector was particularly notable.

While the market continues to favour sellers, their negotiating power is
slowly waning, as an inevitable result of the decrease in sales and the
increase in the number of units for sale. Condominiums are once again
the property type that is posting the greatest activity, currently with
six sellers per buyer, a trend that could bring back a balanced market
for this housing type by the end of 2005.

The spectacular increase in home prices in Greater Montreal continued
last year. Despite the fact that sales slowed down and listings rose,
the average selling price, for all housing types combined, jumped up by
another 13 per cent in 2004. In particular, the average price of an
existing home has exceeded the $300,000 mark on the Island of Montreal
and will move very close to $200,000 in the suburbs as of this year.

If there is one property type that is enjoying a level of popularity
that few had predicted, it is condominium housing. Since the market
bottomed out in 1995, its appeal, in terms of sales, has grown twice as
fast as that of other housing types. This housing formula is
experiencing some jolts, however, with supply increasing at an
accelerated pace and sellers gradually losing their edge on the market.
This particularly holds true in the suburbs, which are less conducive to
this housing type, and which had in fact been harder hit during the
difficult period of the early 1990s.

It can also be seen that condominium construction is intensifying in
several sectors, notably in the outlying area, such as in the MRC des
Moulins (Terrebonne, Mascouche, La Plaine, Lachenaie). More and more,
new units are providing competition for existing units. In this context,
it will be important to keep a close watch on condominium prices in 2005.

The Analysis of the Resale Market: Montreal Metropolitan Area is
available online at
www.cigm.qc.ca/download.aspx?doc=ANALYSEPUBLIC\ang\632453548094882500.pdf

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Canada Mortgage and Housing Corporation
    Paul Cardinal
    Senior Market Analyst
    (514) 283-8391
    pcardina@cmhc.ca
    or
    Greater Montreal Real Estate Board
    Assistant Director, Communications,
    Industry Relations and Legal Affairs
    Linda Grondin
    (514) 762-2181 Ext. 130
    linda.grondin@gmreb.qc.ca