It’s the first time prices have fallen for two consecutive months since June 2021
Montreal home sales and prices slipped in May, in what local real estate brokers call a “turning point,” as rapidly rising interest rates and an increase in new active listings shifted market conditions.
The median price of a single-family home in Montreal edged down less than one per cent month over month to $576,000 in May, according to data from the Quebec Professional Association of Real Estate Brokers. It’s the first time prices have fallen for two consecutive months since June 2021. However, the average home price is still up 16 per cent from May of last year.
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The condo market held steady with the median price remaining largely unchanged from April at $410,000 in May, and saw a 12 per cent gain year over year.
A total of 4,874 homes changed hands in May, falling by nine per cent compared to last year and slipping nearly five per cent since April. New active listings also jumped, rising to 11,304 from the 10,454 recorded in April.
“Not since 2014 have so many new properties been put up for sale in the Montreal CMA market for this period of the year,” said Charles Brant, director of the QPAREB’s market analysis department, in a press release. “This is the first time since 2015 that the Montreal CMA market has recorded an increase (0.3 per cent) in its inventory of properties on the market for this period of the year. It is also the first month for all periods combined since September 2015.”
But Brant said conditions still favour sellers over buyers.
“Nevertheless, market conditions remain very tight, to the advantage of sellers, with overbidding levels still very high, particularly on the outskirts of the Island of Montreal,” he said. “The changes observed in the market dynamics are precisely explained by the extremely high prices combined with a rapid increase in interest rates, whether they are fixed or variable.”
The Bank of Canada’s aggressive rate hike path, including the 50-basis point increase on June 1, has been making it more difficult for would-be homebuyers to qualify for a mortgage in the Montreal market, Brant said.
“The strong price increases will thus become increasingly anecdotal over the next few months with a level of overbidding that is bound to fade,” he said.
Montreal joins other housing markets across Canada such as Toronto, Vancouver, and Calgary, that have seen rising rates bite into mortgage demand and weigh on the growth of real estate values. Toronto, which also reported May market data this week, has been particularly hard hit by a demand shift, seeing prices slip for a third straight month.
• Email: shughes@postmedia.com | Twitter: StephHughes95
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