In 2024, the real estate scene in Greater Montreal is set to follow a familiar pattern, with a slight uptick in prices for homes and condos. However, the overall number of home sales is expected to decrease for the fourth year in a row, mainly due to the impact of high interest rates.
Predictions for Property Transactions
The number of houses and condos changing hands in the Montreal area is predicted to drop by about 3% next year, a smaller decline compared to the 15% decrease estimated for 2023. This forecast comes from the Quebec Professional Association of Real Estate Brokers (QPAREB).
Price Trends for Homes and Condos
Despite the downturn in sales, there's a silver lining. The median prices for both single-family homes and condos are likely to see a small rise in 2024, reversing the modest drops experienced this year.
Interest Rates and the Real Estate Market
The past couple of years have seen multiple interest rate hikes by the Bank of Canada, which has cooled off the real estate market, not just in Montreal but across various regions. However, the future looks a bit brighter. Many experts believe that the central bank will maintain the interest rate at around 5% for the first half of 2024, and might start reducing it in the latter half of the year.
2024: A Year of Two Phases
Stéphanie Lapierre, the chief economist at QPAREB, suggests that 2024 might be a year of two distinct phases. The beginning of the year might be challenging due to economic uncertainties and high interest rates. However, the latter half of the year is expected to see an upturn, with a potential increase in property prices, mainly because the number of available properties remains low.
Sales Forecast in Detail
QPAREB estimates that about 35,230 residential real estate transactions will take place in metropolitan Montreal next year, a slight decrease from this year's predicted 36,285. Notably, home sales in the area have been declining annually since 2021.
Province-Wide Trends
Across Quebec, residential property sales are expected to fall by 2% next year. Interestingly, the median prices for single-family homes across the province are likely to remain relatively stable.
Market Stabilization on the Horizon
2024 is anticipated to be a pivotal year for the real estate resale market, marking the beginning of its stabilization.
Factors Influencing the Forecast
Several key factors have been considered in QPAREB’s forecast. These include the expectation of a gradual decrease in interest rates starting sometime in 2024 and a slight rise in unemployment in the province, expected to reach around 5.3% on average.
The Early 2024 Market Scenario
With a slowing economy, increasing joblessness, and continued high property prices, the beginning of 2024 might see a dip in home sales. This scenario could lead to more listings on the market, giving buyers more leverage to negotiate better deals.
A Shift Later in the Year
Despite the initial slump, the market is expected to rebound later in the year. Charles Brant from QPAREB predicts a swift response to any announcements of rate cuts, leading to a more robust market recovery. Additionally, factors like strong migration flows and hopes for an economic rebound should support the demand for homes.
Insights from Industry Experts
Marc Lefrançois, a broker with Royal LePage, notes that the limited availability of housing in Greater Montreal continues to be a challenge. This supply-demand imbalance is expected to keep pushing the market upwards.
Price Projections for Montreal
In Greater Montreal, despite relatively low activity levels, prices have remained stable. QPAREB forecasts a 2% increase in median prices for single-family homes and a 1% rise for condos next year. Specifically, the median price of a single-family home is expected to reach approximately $549,400 by the end of 2024, up from the current estimate of $539,800. For condos, the median price is projected to hit around $395,600, up from $390,200.
Royal LePage's More Optimistic Forecast
In contrast, Royal LePage presents a more optimistic view for 2024. They predict a 5% year-over-year increase in aggregate home prices in Greater Montreal by the fourth quarter of 2024, reaching $610,260. This includes a 4.5% rise for single-family detached properties to $684,998 and a 6% increase for condos to $471,912. These figures are based on a weighted average of median values for all housing types, including both resale and newly-built homes.
