Quebecers who dream of owning their home are already facing rock-bottom interest rates and high mortgage payments. Now house prices are up 15%, making life more difficult for first-time buyers.
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“One of my clients bet on eight houses before getting it,” relates Stéphane Bruyère, mortgage broker in the Quebec area, where “everyone is fighting for the same houses between $280,000 and $320,000.”
The cheapest are the target of 10-15 offers each time, a bidding war reminiscent of the pandemic and its effect on the market. The median price in the Capitale-Nationale is $360,000 for a house and $268,000 for a condo. In Montreal, it’s $550,000 for a single-family home and $395,000 for a co-ownership.
The enthusiasm is reflected in sales, up 30% in Montreal and 33% in Quebec in February. “The market is less sensitive to rising rates in Quebec, because monthly payments are lower,” observes Charles Brant, star analyst of the Quebec market.
The overheating is a reflection of what happened in Granby, Saint-Hyacinthe and Drummondville, three places where prices have already skyrocketed.
- Listen to the interview with Yanic Parent, real estate broker, via QUB :
“These were undervalued markets, like Trois-Rivières is currently,” says the man who works for the association of real estate brokers.
“What’s fun about Quebec,” he says, is that certain markets are still affordable.
While Montreal, the Laurentians and Outaouais are overpriced, there are interesting opportunities in Centre-du-Québec, Chaudière-Appalaches or Saguenay.
Go away, poor people
When house prices rise, new Quebecers become unable to access property, recalls Stéphane Bruyère.
He gives the example of two young adults who each earn $50,000. “What do you buy with $100,000 of income?” he asks.
Not much, in fact, since first-time buyers must qualify for 7% interest on the mortgage, even if they will pay 5%.
“It takes away 15% of purchasing power,” summarizes the person whose job it is to calculate that.
They bought, they tell
Here’s what’s happening on the ground right now.
A Laval police officer who goes on the road
A Laval police officer in their forties and his partner earn $250,000 per year and have just paid $445,000 for a single-family home in Nicolet. “It’s easily worth $800,000 in Laval,” assures the man. He now has to travel 150 km to get to work. “I listen to podcasts, it’s fine,” he says. A very small price to pay so as not to ruin yourself with a mortgage that would take you by the throat.
An insurance professional from Beloeil who starts from scratch
An insurance professional in her early 40s separates. Her ex bought her share of the Beloeil semi-detached house for $250,000 in 2012. To be closer to her brothers and sisters, she bought a four-room condo in Mascouche. Transaction price: $335,000. “It’s damn expensive to separate. I understand those who endure,” she laughs.
A real estate broker who rents in Quebec
He too has just separated. Closer to 60 than 50, he rents a 4 1⁄2 in Lebourgneuf, near Quebec, for $1,300 per month. If he buys the condo for $300,000 with a down payment of $60,000, his monthly payment will be $1,900 with taxes and common fees. “I would be crazy to pay $600 more,” he says, before adding that “it makes no sense.”
A 28-year-old administrative assistant who is disillusioned
She was happy to announce to her parents that with her partner, they were now making $100,000 per year. The 28-year-old administrative assistant thought she could buy the house of her dreams, in Sainte-Foy or Cap-Rouge. After around fifteen visits and numerous bids, she became disillusioned. She had to fall back on a house to renovate in another area, in L’Ancienne-Lorette, for $330,000. “These are neighborhoods that, historically, are middle class. How come I’m not able to buy there, when I’m squarely in the middle class?” asks the young woman, who still says she’s “relieved” to have managed to buy a House.