Affordable homes still on the rise?

Rumors were circulating on social media (and residential streets): despite the slowdown in the real estate market, the affordable home segment would still be the subject of an outbid. But what about on the ground, grassed or not?

Affordable, you say?

Are the buyers least able to pay dearly still those who are forced to outbid?

A recent rumor circulating in the streets was that the affordable home segment was again subject to one-upmanship this spring, despite the slowdown in the real estate market.

Is that the case ?

First observation, although they are called affordable houses, they are still just as difficult to approach. On April 5, a search on the Centris real estate platform showed 97 single-family homes for sale on the island of Montreal in the $300,000 to $450,000 range.

The $450,000 to $600,000 segment had 324 registrations.

Many of these 97 less expensive properties were located in the east of the island, in the Rivière-des-Prairies and Pointe-aux-Trembles sectors.

Let’s see what’s going on there.

On the ground (still muddy)

“Yes, what we see on the ground is still multiple offers in the property which is said to be affordable”, observes Mélissa Lampron, general manager of the RE/MAX D’ICI agency, which covers in particular the eastern tip of the island of Montreal and the cities of Terrebonne and Repentigny.

One-upmanship?

There may be a linguistic escalation. Is an active market synonymous with overbidding?

“In fact, the appropriate term would be simultaneous offers or presentation of multiple offers, describes Mélissa Lampron. That doesn’t automatically mean overkill. That does not mean that we will have prices offered above the asking price, but very often, this is the equation that is made. »

A drop in the top

A drop in prices has indeed been observed, but it has mainly occurred in mid- to high-end properties.

“As for the eastern tip of the island, for a single-family property, we are talking about a median price of $465,000, but an average price of $515,000,” informs the director.

“Yes, there is a small price correction. In the sectors you are talking to me about, we are in about a 2 to 4% loss in value in the median prices. But it’s nothing major, and it’s not at all what was announced. »

heading south

Let’s check to the south of the island, this time in the region of Saint-Jean-sur-Richelieu.

“You hit the nail on the head. For anything under $500,000 that is put at the right price, we are almost always in a situation of multiple offers,” asserts Alexandre Desrochers, president of Royal LePage Excellence, an agency located in Saint-Jean- sur-Richelieu and has 42 brokers.

Around this municipality, 60% of the properties put up for sale are the subject of multiple offers, he estimates.

Nothing to do with the frenzy of the pandemic period, however.

“It’s not 10, 12, 15 offers anymore. We can speak of one to five offers for most of the overbidding situations that remain, ”explains Alexandre Desrochers, himself a broker.

In a situation of overbidding, however, the bonus is much smaller than a year or two ago. “Before, we went up to $50,000 or $100,000 at the top of the price, but we are no longer there at all. We’re about $1,000 to $10,000 above the price these days. »

Fewer bubbles in champagne

The number of registrations in the Saint-Jean-sur-Richelieu region has doubled over the past year. “During confinement, we were at 125 registrations, currently we are at around 300,” says Alexandre Desrochers.

“On the other hand, it changes absolutely nothing,” he adds. At 500 registrations and more, we would see more balance, but we haven’t arrived there yet. »

The market will remain favorable to sellers for at least another year, predicts the president of Royal LePage Excellence, despite the slight correction in prices he is also seeing on his market.

” Take for example a property that was listed at $425,000. We knew it was going to sell for $500,000. Today, that property may sell for $435,000. There is a drop, but only compared to the height of the confinement. People are still satisfied with the price at which properties are valued. Me, I call that the bubbles in the champagne: the champagne is less effervescent. »

But we are not yet talking about a real estate bubble.

This dear one-upmanship

Yes, there is still escalation, bids an analyst.

“The proportion of overbidding is still much reduced in the market as a whole compared to what it was last year, but there is still some overbidding, you have to be aware of it”, confirms Charles Brant , Director of the Market Analysis Department at the Professional Association of Quebec Real Estate Brokers (APCIQ).

“Really significant overbids, i.e. when sales are concluded 10% and more above the displayed price, represent perhaps 5 to 10% of transactions, depending on the markets”, he notes. .

These multiple and simultaneous offers are more concentrated in properties that are trading around the median price of the relevant market.

“And inevitably, it affects properties that are perhaps more affordable, which are above all properties that are put up for sale at a fair price, and not at an exorbitant price or which refers to comparables from a while ago. six months,” says Brant.

In the Montreal region, price negotiations affect 15 to 20% of transactions, estimates the analyst. “There are still relatively few negotiations in a market that is in a sharp slowdown,” he notes.

A price that has nevertheless decreased over the past year.

The price

“The price of single-family properties peaked in Montreal in April 2022,” recalls Charles Brant.

The median price of single-family homes in the Montreal region fell 5% in March compared to the same period last year, according to the most recent data released by the APCIQ this week.

A drop which, in comparison to the cataclysmic forecasts, “is not that terrible,” judge Charles Brant.

The median sale price for a single-family home was $535,000 in the Montreal area in March 2023. During the same period, the price of Montreal condos fell by 5%, while that of plexes fell by 8 %.

Despite the rise in interest rates, “there has not been a tsunami of new listings that have come onto the market from people who were no longer able to pay their monthly payments, underlines the analyst. That’s not what happened at all.”

Instead, the market became crowded with less attractive properties that did not find takers.

“The others were able to trade at the list price, which is to say without too much downside negotiation. This is why we now realize that the March 2023 prices for single-family homes are not much lower than those we knew last year at the same time. »