At the beginning of 2023, all eyes are focused on mortgage rates and the price of houses/buildings.
The year 2022 ended with mortgage rates not seen for many years. House prices continue to rise and buying a building becomes difficult with a calculated negative return on investment.
On February 21, 2023:
Desjardins (Promotional): offered a 5-year fixed-rate closed loan at 5.69%.
BMO, a 5-year Smart Fixed-Rate Mortgage FROM 5.04% on.
NBC, a Fixed Rate over 5 years at 5.69%.
Rates are expected to rise further because the Bank of Canada declared on February 16(1) that a “The return to the 2% inflation target will restore the stability our country has enjoyed over the past 30 years, for the benefit of all Canadians.”
Also, on 21 February, the Consumer Price Index continued to be high at 5.9% (2).
We see more and more articles discussing financial recoveries, the growing difficulties in meeting monthly expenses, and an increase in requests for assistance with debt consolidation.
And according to the latest data from the Quebec Professional Association of Real- Estate Brokers (QPAREB), the Montréal CMA still has a low supply compared to demand and as low a level of sales as in 2009! (3)
- All major sectors of the Montréal CMA recorded a slowdown in their activity at the beginning of 2023. The decline compared to January of last year varies between -26% and -39%. The decreases were the smallest in the Vaudreuil-Soulanges (79 sales), the North Shore of Montréal (441 sales) and Saint-Jean-sur-Richelieu (51 sales) sectors, with -26%, -33% and -35% respectively. The South Shore of Montréal, with 405 transactions, saw a decrease in sales comparable to that of the CMA as a whole (-36%). Finally, Laval (171 sales) and the Island of Montréal (644 sales) recorded a more marked decline in activity, with -38% and -39% respectively.
- The decline in transactional activity is present in all property categories. With 157 sales in January 2023, plexes suffered the most notable decline compared to the same period a year ago (-52%). They are followed by condominiums (733 sales), which decreased by -38%, bringing sales to 2017 levels. Finally, the number of transactions for single-family homes is down -31% to 898 sales. Note that this is a historically low level for single-family homes. Since the data were compiled by Centris in 2000, the number of sales in this property category in January had consistently exceeded the 1,000 sales mark.
- Proof of the accumulation of properties on the market shows that active listings have seen a marked increase, up 65% from January 2022. As a result, 15,020 registrations were recorded in the Montréal CMA in January 2023. This increase is supported by an increase in listings in all property categories. It should be noted, however, that the single-family class stands out for an even more marked increase (89%). The inventory of available properties is thus slightly higher than the pre-pandemic level of January 2020.
- All three property categories in the Montréal CMA recorded a decline in their median price compared to January 2022. Condominiums, with a median price of $370,000, saw the smallest decline (-3 per cent compared to the same period last year). Small income properties and single-family homes follow with decreases of -6% and -7%, respectively. Median prices were $675,000 and $500,000.
- On a monthly basis, the decrease in the median price between December 2022 and January 2023 is less marked, between -1% and -2% or between -$5,000 and -$15,000. The median price of condominiums was the most stable, with a -1% decrease. For their part, plexes and single-family homes both recorded a decline compared to the previous month of -2%.
It will also be necessary to monitor the number of sales related to financial recoveries, an impact that will be felt soon. To date, on the Centris.ca website there are 105 properties identified as “Reprise de finance” in Quebec.
The Office of the Superintendent of Bankruptcy reported: More than 100,000 consumers filed for insolvency in 2022. This is an increase of more than 11% compared to 2021, which was itself an... incomparable! (4)
“Government aid is no longer available, it’s a return to normal, and the insolvency rate is also returning to normal,” he says. But there are possibilities that it will go beyond what we had seen before the pandemic.”
A dark period in sight for many indeed.