This text is part of the special Real Estate section
After a meteoric rise in mortgage rates and a significant slowdown in property sales last year, 2023 points to a stabilization of the markets despite the uncertain context, according to the Association professionnelle des courtiers immobiliers du Québec (APCIQ).
The slowdown observed in 2022 due to the increase in interest rates is continuing this year, assesses Charles Brant, director of the market analysis service at the APCIQ. “We have really arrived at the minimum of what we can do in terms of activities. We have been at historic lows since the beginning of the year, ”he notes.
Since March 2, 2022, the Bank of Canada has raised its key rate eight times in a row. “It’s something quite historic in its magnitude. The market took the hit, especially with the disappearance of the outbidding and the fairly rapid correction that followed in prices,” observes Mr. Brant.
On March 8, the central bank finally chose to maintain its key rate at 4.5% and not proceed with a ninth increase. An announcement that will give more predictability to buyers, said Mr. Brant.
A revival of activity
The end of winter should notably mark a revival of activity, believes Mr. Brant. A phenomenon already observable in March. “We saw 30% drops in transactions compared to 2022. This gap should start to narrow as we go through the year,” he says.
Moreover, Desjardins Group predicts a price correction of 23% in Canada and 17% in Quebec by the end of 2023. Some markets will experience price declines in the months to come, believes Mr. Brant, even if “the biggest is behind us”.
But some regions are doing better, such as Quebec City, he notes. “This market has shown very strong resilience since the start of the turnaround process,” he says.
Across the province, current real estate activity is mostly for “the most desirable homes that are priced correctly,” he says. “There’s a whole section of properties piling up because they haven’t found a taker, given the low level of transactions. These properties will finally be negotiated over the next few months. And it is sure that it will lead to further price reductions in certain markets, ”he predicts.
Condominiums, however, should experience a less pronounced price drop than single-family homes. “It makes perfect sense, as these are less expensive and therefore more accessible properties,” explains Mr. Brant.
But some markets are still overheating, especially in Trois-Rivières and certain areas of Montreal. “There is still a little overbidding, because there is a very strong deficit of offers compared to demand”, he says. Moreover, the ratio of the number of higher bids of more than 10% between the sale price and the posted price was 4% on average for single-family properties in Quebec in February 2023. It is in Trois-Rivières that it was the highest, with a rate of 9%, according to data from the APCIQ by the Centris system.
But the “majority” of properties in the metropolitan area sell for list price. However, we are seeing more and more transactions where the price is subject to negotiation, observes Mr. Brant.
A market still in favor of sellers
If one-upmanship is more and more a thing of the past, it is still the sellers who have the big end of the stick when it comes time to make a real estate transaction, observes Mr. Brant. However, a glimmer of hope seems to be appearing for the first buyers, who will be able to make offers without fearing a major overbid. “There, it is much less stressful. Interest rates are higher, yes, but prices are also lower,” he points out.
However, Quebec is not about to see a market like the one it experienced during the pandemic. “It was exceptional. We can talk about stabilization, and that’s already very good for 2023,” explains Mr. Brant. Based on the forecasts of several economists, he estimates that the return to inflation of around 2% could mean that interest rates could finally fall as early as the end of 2024. “And that, of course, is favorable to the real estate market. »
In the meantime, the affordability of the Quebec market, in comparison with that in the rest of Canada, and the lower level of indebtedness of Quebecers will continue to support real estate activity in Quebec, believes Mr. Brant.
This special content was produced by the Special Publications team of the Duty, pertaining to marketing. The drafting of Duty did not take part.