The historic decline in construction starts in Quebec, revealed by CMHC yesterday, does not in any way surprise one of the most active real estate developers on the North Shore of Montreal.
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“Interest rates have become so high that no one can afford to buy anymore. Overnight, buyers disappeared and demand completely evaporated,” laments promoter Raymond Junior Courtemanche.
“The fall was brutal,” admits Raymond Junior Courtemanche, president of Investissement Ray Junior in Mirabel.
Ray Junior Investment
The businessman, to whom we owe, among other things, the development of the residential and commercial complex Mirabel Cityalong the A-15 motorway, is pleased to have not yet, like others, been forced to close shop.
Orphan homes
The market is so slow, he confides, that eight of his townhouses, built two years ago, remain empty because they have not been able to find buyers willing to commit.
These prestigious three-story houses, with double garage and access to a clubhouse (gym and swimming pool) are offered from $650,499, before taxes.
“Before the Bank of Canada raised rates, I sold between 50 and 60 of these houses per year,” he says. In 2022, I only sold 5 or 6. And in 2023, only one. The fall was brutal.”
In such a context, the president of Investissement Ray Junior had no other choice than to review his plans and put on ice a project of 170 condominium units spread over 15 floors, called the Sky Blue 3.
More recently, it believed it would spark a recovery in demand by offering buyers 0% interest financing for the first 12 months. However, despite the efforts made and the curiosity provoked, the results were overall modest, he admits.
Ray Junior Investment
Moving to rental
Demand has shifted over the past two years to the rental market, he notes. Not crazy, builders would like to follow the trend and build more rental units.
The difficulty, argues Mr. Courtemanche, is that the financing rates offered to entrepreneurs are at least 30% higher than those of mortgage loans, currently in force.
“However, for a project to be profitable with such financing conditions, the rent must be increased by at least $500 per month,” he laments. In such circumstances, we should not be surprised, he believes, that most have chosen to slow down the pace of construction, thus causing the number of construction starts to plummet – both in single-family homes, condos, and rental properties. – at levels rarely reached in the past.