Montreal Market Forecast 2009 - CMHCIn 2009 the Montreal Real Estate market will become gradually more balanced, according to the CMHC 2009 market forecast.
Given that sales will fall and listings will rise, the market will ease slightly over the coming year. Average resale prices will continue to increase, but more slowly than in recent years.
A higher proportion of condominium sales will take place in the suburbs and in the less expensive sectors on the Island of Montréal, which will contribute to limiting the growth in prices. For the market overall, prices will therefore rise by 4 per cent in 2008 and by 3 per cent in 2009. Still, on the whole, the market will remain favourable to sellers in the short term and gradually ease toward more balanced conditions in 2009.
Here is the break down of the report:
* Mortgage rates are expected to be relatively stable
* Resale market will be moderately slow
* Condominiums will maintain more demand than single family houses
* Supply of home listings with increase slightly.
* Affordable homes are expected to register increases in starts.
* Prices for single family homes and plexes will go up by an average 4 % in 2009
* Condo prices are expected to grow by 3%
Now, let’s take a look at the details.
- Change of pace for the economy
: In 2009, despite the anticipated decrease in residential construction, several nonresidential projects announced by the different levels of governments, such as the replacement of the Turcot Interchange and the modernization of Notre-Dame Street, will boost employment growth in the construction sector.
However, the level of activity in the manufacturing sector will moderate.
Mortgage rates are expected to be relatively stable
“Posted mortgage rates will decrease slightly in the first half of 2009 as the cost of credit to financial institutions eases. Rising bond yields, however, will nudge mortgage rates marginally higher in the latter half 2009.”
**Note: The Back of Canada already made cuts to the interest rates. Check the December 9th press release.
The next scheduled date for announcing the overnight rate target is 20 January 2009.
- Resale market to slow moderately
: The growth in prices will be slower for existing homes than for new homes, which will widen the price gap between them and consequently prompt more buyers to turn to the resale market.
While slightly less active, the resale market will still remain strong. The sales levels forecast for 2008 and 2009 will exceed the annual average of 39,000 transactions recorded for the period from 2002 to 2007.
- Condominiums will maintain the upper hand
: Condominiums—the only housing type that will register an increase in sales in 2008—will sustain a less significant decline in demand than single-family houses or plexes 2009.
Affordable housing types, such as condominiums, and homes located in less expensive geographic sectors, are managing better.
Slightly more supply on the market.
Currently, the supply of homes is growing. Listings started to rise again in the second quarter of 2008, and there is every indication that they will end the year up by 7 per cent over 2007. As well, we forecast that they will maintain this momentum in 2009, with an increase of 9 per cent. At the end of 2008, an average of 22,300 active listings per month will have been registered in the GMREB MLS® system for the Montréal CMA.
Affordable homes will again stand out
Overall, total starts will fall this year. However, the opposite will hold true for more affordable housing types, which are expected to register increases in starts. After having exploded in 2007, with a gain of 35 per cent, semi-detached and row housing starts will maintain their momentum this year and rise by 14 per cent to 2,200 units.
Condominium starts will increase, to a lesser extent.
In 2009, these two housing types will again stand out. Semi-detached and row home starts will stay at the same level as in 2008, while condominium starts will register a smaller decrease than the declines that will be recorded for single detached home building and rental housing construction. In all, 7,700 new condominium units will be started next year, or 4 per cent fewer than in 2008.
- The downward trend in single detached home starts
: It began a few years ago, will continue. Because these houses are more expensive, also because the population is aging and households are getting smaller, the need for more spacious homes is less significant than before.