Montreal home prices rise; plus, price outlook for vacation homes

Montreal home prices increased in May, while the city hit a record monthly high in home sales.

The average home price in Greater Montreal increased 5% in May to $373,899, reports the Greater Montreal Real Estate Board. Prices were up 6% to $481,544 on the island of Montreal.

The median price of single-family homes across Greater Montreal was $325,000 last month, up 3% year over year, while plexes, which include two to five units, reached $520,000, a 9% increase.

As for condominiums, the median price was up 6% compared with a year ago, with half of all units selling for more than $257,000.

The real estate board says area home sales hit a record high for May, even though the pace of growth cooled from a year ago.

The board says there were 5,303 home sales in May, up 1% from 5,243 a year ago, based on the real estate brokers’ Centris provincial database.

Last year’s numbers were revised following the addition of the Saint-Jean-sur-Richelieu area in the monthly surveys. Sales rose 16% in May 2017 when including the region southeast of Montreal.

Condominium sales climbed 14% compared with a year ago. Meanwhile, sales of single-family homes were down 6%, while plexes rose 4%.

The increase in sales came as the number of active listings fell 16% to 24,501, from 29,289 a year ago. New listings fell 1% to 6,387, compared with 6,431 in May 2017.

B.C. housing tax could cause dip in vacation property prices

For B.C., a potential drop in vacation home prices is forecast.

That’s because the new speculation tax on out-of-province buyers will likely convince a wave of owners to sell their vacation properties, pushing down home prices, says a Royal LePage forecast.

Read: Tax penalties tied to real estate increasing in Ontario, B.C.

By the end of September, the real estate company is expecting the average price of a recreational home in B.C. to be $531,333, a 2.8% drop from last year’s average of $546,444.

Under B.C.’s speculation regulations, owners outside the province will be taxed 0.5% this year. Next year will see the rate climb to 2% for foreign investors and 1% for Canadian citizens and permanent residents not living in B.C. but owning properties in the province.

Royal LePage concluded the tax would spark a price dip in B.C.’s recreational housing sector after surveying 200 real estate advisors between May 15 and June 1 who specialize in such properties.

About 55% of B.C. respondents said they think the tax will “weaken momentum within the region and keep sales activity from reaching its true potential,” while 40% thought it would impact prices.

Royal LePage chief executive Phil Soper said the tax has already weakened demand for B.C. vacation homes from Albertans, which he considers “the biggest buying cohort outside of the province.”

“You’d think with a strong economy and so much availability, you would see a stronger recreational property market in B.C., but it has been balanced by the recent regulations,” he said.

He and his company also predicted a 0.9% dip in recreational home prices in Manitoba and a 7.5% fall in prices in Atlantic Canada, bringing the average price in the region to $228,754.

Soper said he attributes Manitoba’s expected decrease to an increase in supply, but said he expects it to be a “short-term blip” because Winnipeg has been one of the most stable recreational markets over the last few years.

He said Atlantic Canada’s predicted drop stems from a lot of young graduates—a group that tends to buy homes more fervently—moving out of the province, and a boom in people choosing to renovate instead of move.

The country as a whole was expected to fare much better, said Soper and Royal LePage, which is forecasting a 5.8% increase in national recreational home prices. That would bring the average up to $467,764 from $442,239 previously.

Ontario and Alberta could also experience sharp spikes in recreational pricing.

Royal LePage said Ontario recreational home prices will average $535,885, up 10.4% from last year, while Alberta’s will hit $770,100, a 8.9% increase.

Alberta, said Soper, will benefit from an “exodus” of people looking away from B.C. for recreational properties and will see price increases because of improved employment opportunities and strong oil prices that drive activity in the market.

He said that Ontario’s recreational market will be driven by large numbers of people moving into the province and by an expected decrease in inventory levels and an increase in sales activity.

Plus, he said gen-Xers and retiring baby boomers, who are increasingly turning to recreational properties as “a reasonable alternative” to their current homes, will also spark a price hike in the market.

Also read:

Single homes in Vancouver nudge mark where prices can fall: board

GTA home sales down 22% in May, but prices remain strong