Canada’s chronic housing supply shortage has been front and centre in conversations about real estate over the last several years. While inventory shortages have been most notable in Ontario and British Columbia, the pandemic has shone a light on Quebec’s supply-demand imbalance, which has pushed home prices higher than ever.
Now that the worst of the pandemic is likely behind us, home prices have begun to come back down to earth in many markets across the province, including Greater Montreal, Gatineau, Quebec City, Sherbrooke and Trois-Rivières; regions that posted a quarterly price decline between the second and third quarters of 2022, according to the recent Royal LePage House Price Survey.
In the Greater Montreal Area, the aggregate price of a home increased 7.3% year-over-year to $554,800 in the third quarter of 2022, and posted a decrease of 5.3% compared to the second quarter of 2022, or $30,900. This represents the first quarterly decline in more than five years for the region.
“The Greater Montreal Area’s real estate market entered a notable price correction period between the second and third quarters, lagging slightly behind Canada’s other two major urban centres,” confirms Marc Lefrançois, licensed real estate broker at Royal LePage Tendance in Montreal. “Selling prices are still higher than they were in 2021, but are trending downwards and stabilizing on an annual basis, while market conditions return to balance.”
Considering current market conditions, Royal LePage has revised its forecast downward and expects the aggregate home price in the Greater Montreal Area to increase 2.5% to $545,915 in the fourth quarter of 2022, compared to the fourth quarter of 2021. This would mean that the aggregate price would be down 1.6% between the third and fourth quarters of 2022.
“This modest correction in real estate prices was inevitable and will provide some breathing room for buyers, but that could be short-lived if economic fundamentals and the global political climate remain as they are today,” added Lefrançois. “While prices have declined, demand has not disappeared. On the contrary, many cohorts of buyers, including first-time homebuyers, remain hopeful that prices will decrease enough to meet their budgets. However, there is no indication that interest rates will reverse in the short term, which will counter any affordability gained by the correction in home prices.”
Lefrançois added that although home prices are hardly a bargain today, current market conditions offer considerably greater equality in the negotiation process.
“These days, buyers can take their time to evaluate their options, visit properties within a reasonable timeframe, and include conditions in their offers that suit their needs and protect them. At the same time, sellers can list their homes for sale with the confidence that they will also be able to purchase another property in a less competitive environment,” he concluded.
Elsewhere in the province:
- Gatineau: In the third quarter of 2022, the aggregate price of a home in Gatineau increased 9.3% compared to the third quarter of 2021 to $411,200, but decreased 6.2% between the second and third quarter of 2022, representing a gap of $27,200.
- Quebec: In the third quarter of 2022, the aggregate price of a home in Quebec City increased 7.7% compared to the third quarter of 2021 to $335,100, but decreased 1.5% between the second and third quarter of 2022, representing a gap of $5,200.
- Sherbrooke: In the third quarter of 2022, the aggregate price of a home in Sherbrooke increased 9.4% compared to the third quarter of 2021 to $318,200, but decreased 4.3% between the second and third quarter of 2022, representing a gap of $14,400.
- Trois-Rivières: In the third quarter of 2022, the aggregate price of a home in Trois-Rivières increased 18.7% compared to the third quarter of 2021 to $304,500, but decreased 2.1% between the second and third quarter of 2022, representing a gap of $6,600.