Montreal home sales and lower prices amid ‘changing market dynamics’

Sales down 18% from last year

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The Montreal real estate market saw its slowdown deepen in July, joining other Canadian real estate markets posting weakness in the latest data as interest rate hikes weigh on demand.

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The median price of a single-family home in Montreal in July was $550,000, down $30,000 from April’s peak, according to data from the Association professionnelle des courtiers immobiliers du Québec. Prices, however, are still 10 percent higher than last year at this time.

Condominiums, often seen as a more affordable entry point into the housing market, have seen their first price drop this year to a median of $391,500, although that’s still 9% more than last year.

The number of homes changing hands also fell, with sales falling 18% from a year earlier to a July total of 3,080. The board added that as interest rate hikes continued, the market downturn “showed signs of intensifying.”

“Following what was recorded in June, the shift in market dynamics is clearly confirmed,” said Charles Brant, director of QPAREB’s market analysis department, in a press release accompanying the data. “The magnitude of the interest rate hike, in just four months, accelerated the market downturn, albeit much more gradually than in other major Canadian cities.

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“While it is true that the summer season is generally calmer, we are seeing a marked deceleration in the pace of sales in July while, simultaneously, active listings continue to reflect a decidedly upward trend…”, continued Bran.

Active listings in the city rose for the sixth consecutive month to 12,668, 28% more than in July 2021.

Montreal joins other major Canadian cities like Calgary, Vancouver and Toronto in seeing the pace of sales slow precipitously due to rising rates and fears of a looming recession. Oversized rate hikes, such as the full percentage increase in July, could put further pressure on these markets.

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On the other hand, the housing market in Québec remained vigorous, with sales increasing by 1% compared to last year. The Association des courtiers du Québec said it was the second consecutive month of gains, but warned that there were signs that this market was also slowing.

“While this rise will need to be confirmed in August and September before we can speak of a trend, it does signal a slowdown in the market and much weaker price growth or stabilization over the next few months, which is consistent with the steeply rising interest rate environment we’ve seen since early spring,” Brant said.

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