Despite the slowdown, the proportion of purchases of luxury residences, or those priced well above the Quebec median, has increased considerably since the pandemic.
In Montreal, for example, transactions of houses priced above the $900,000 threshold have practically doubled since 2019, according to the Professional Association of Real Estate Brokers of Quebec (APCIQ). If they represented 17% of transactions in 2019, their proportion now stands at 31% since the start of 2023.
The same trend is observed in the Quebec market, but with even more intensity. In fact, transactions involving a single-family residence of $700,000 or more in Quebec have more than quadrupled since the start of the pandemic. They went from 2.5% of total transactions in 2019 to no less than 11% in 2023.
According to economist Charles Brant, director of market analysis at the APCIQ, this situation is mainly explained by an abnormally rapid growth in the number of wealthy households in Quebec in recent years.
Economist Daren King, of the National Bank in Montreal, cannot confirm – with supporting figures – such an assertion. “One thing we know, however, is that many have taken advantage of the pandemic to clean up their finances and generate excess savings. This is probably also true for those who were already in a better position.”
Saguy Elbaz Team, Sotheby’s International Realty Quebec
New millionaires
Among them, Charles Brant primarily points to households that already owned a property before real estate prices exploded until 2022. Since February 2000 until today, the median price of a single-family residence in Quebec has grew by 53%, something never seen before which, he says, has allowed countless owners to get rich very quickly in recent years.
Entrepreneurs in the renovation and construction industry who, taking advantage of the shortage context of recent years, have invested fully in the “flip” industry [achat et revente rapide] many have experienced the joys of getting rich quickly.
The same goes, continues the APCIQ economist, for several real estate professionals, working at the frontier of real estate management and the digital economy. Taking advantage of the total lack of supervision and legislative supervision in this industry, short-term rental platforms, such as Airbnb, Vrbo, and even Marketplace, have helped give birth to dozens of other millionaires in Quebec.
Finally, according to him, there would be a host of other digital artisans (visual effects for cinema and the video game industry) and research professionals in the artificial intelligence sector, likely to fill the ranks of these nouveau riche able to afford these increasingly numerous prestigious properties ($900,000 and more).
Unlike long-term wealthy families, however, they appear much more sensitive to rapid fluctuations in mortgage rates. For the moment, thanks to the banks’ accommodating policies, the worst has been avoided, specialists note. But the multiplication of fire sales by owners caught in the throat remains a possibility in the coming years.