The suburbs of Montreal, epicentres of one-upmanship

It is hard to believe that barely five years ago, overbidding only affected 8% of real estate transactions in Quebec, whereas this year it is the case for more than half of them. The pandemic, combined with the scarcity of properties on the market, has exacerbated competition between potential buyers, forcing those wishing to review their budgets and bet ever higher.

“Before, we had a big piece of land, swings in a tree, a playhouse where my three-year-old son could play. But right now, my backyard is a parking lot. There isn’t even any grass. »

Since the summer of 2020, Maxime Grenier has gone from owner of his dream house, in Saint-Eustache, to tenant of a six and a half. A frugal all his life, he bought his first property at age 24. “I was doing everything [le comptable] Pierre-Yves McSween advises us to do it,” he laughs.

It was a five-bedroom single-family home with a large basement and 6,000 square feet of land, surrounded by cedar hedges. She witnessed the birth of Maxime’s son in 2018, as well as his two separations… and it was the last, in the summer of 2020, that forced him to sell.

“I would have liked to buy out my ex-girlfriend’s part, but we had just done some major work and refinanced the house, so I no longer had the means. I said to myself: I will go to an apartment for a year or two, the time to reorient myself, then I will buy something else. »

Today, with his shares on the stock market plummeting and house values ​​continuing to soar, he doesn’t see the day when he will once again have the means to afford his large green yard. “I feel like I’ve gone back ten years of having to stay in an apartment. »

“Everybody hurry up”

In two years, a previously uncommon technique has become the norm in the greater Montreal area: posting a property for sale at the beginning of the week, making visits during the following weekend, then accepting offers until Monday or tuesday. The tighter the sales cycle, the more the overbidding is encouraged.


“Prices are displayed lower to attract people quickly to visits, according to Mathieu Lagarde, president at Christine Gauthier Immobilier. This strategy creates a kind of panic, potential buyers say to themselves: “this house is not expensive, I’m going to hurry up”. But everyone is hurrying, and the prices are going up. »

As proof, the average price of existing properties approached $500,000 in Quebec during the first quarter of 2022, an all-time high. This price increase, estimated at more than 15% annually, has been constant for more than a year “after having exceeded 20% in the first quarters following the start of the pandemic”, according to Desjardins.

The real estate broker examined the sales statistics for the past few months in the borough of Ahuntsic, in Montreal, where his agency has the most presence. According to him, properties that are selling with high bids are often displayed well below their value. “The higher bid is not made only under the influence of emotion, the price offered by the sellers is often very close to the real value of the product. However, he believes that the prices paid in other markets go well beyond the value of the products purchased, which should force a price correction over the next few years.

However, according to the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ), “a price significantly lower than the market value and the comparables used, and this, with the aim of creating an overbid, is not permitted”.

Maxime Grenier’s house in Saint-Eustache was listed at $299,000 in 2020, on the recommendation of the broker, who estimated its value at around $330,000. The seller was uncomfortable with the idea of ​​lowering the display price, but his broker insisted: this is how we reach the desired price from now on. He finally got $5,000 less than he had hoped for, proof that this strategy does not work.


A perverse effect on expectations

After many lost purchase offers, several buyers offer from the start an amount of 5%, 10%, even 15% above the displayed price to ensure that they are in the race, notes Charles Brant, director of the market analysis department at the Professional Association of Quebec Real Estate Brokers (APCIQ). “It’s something we’ve never seen before, and it’s justified because we say to ourselves: there is not enough supply compared to demand, so prices will continue to rise. increase. »

This new way of doing things has a perverse effect on the side of the sellers, believes Mathieu Lagarde: they expect to receive multiple offers and, when this is not the case, they think that they have not got the right price. Yet properties sold by Christine Gauthier Immobilier only receive an average of three offers, according to the agent.

Overheating also prevents many owners from going ahead with the sale of their home because “today’s seller is tomorrow’s buyer,” recalls Mathieu Lagarde. A problem that Inessa Toussaint faced when she sold her house a year ago, before having found the rare pearl herself.

“My broker told me that it was not necessary to buy first. I only had three months to find it, it was really tight, there was one-upmanship everywhere. I feel like he took advantage of my naivety to get his commission. He said to me: “We have time”. »

The 35-year-old mother was looking for a two-story, turnkey house with spacious bedrooms. “Finally, I threw it all in the trash,” she admits regretfully.

After nine lost offers to purchase and the date of the handover to the notary which was advancing, morale began to drop. She gradually increased her budget until she was offering $70,000 above the list price—an offer she still lost. This is why she finally turned to a less well-maintained property, sold without overbidding.

“It wasn’t what I wanted, I think it’s small, it takes a lot of renovations and I’m not manual at all! But when I got there, I just wanted to get out of this carousel, stop running from left to right every week. I needed to find myself a roof, and I will stay here until my daughter finishes her primary education, hoping that in five years the market will have calmed down. »

Insufficient supply

Contrary to popular belief, the trend in Montreal is not so over the top this spring. Rather, it is its neighboring regions that pay the price for the trend towards pandemic urban exodus.


The duty obtained Centris data from more than 35,000 real estate transactions that occurred between 1er January and March 31, 2022, broken down by neighborhood and municipality, which include, among other things, posted prices and selling prices.

Among the most coveted regions, we find the North Shore – in particular the adjoining part with Lanaudière, therefore Terrebonne and Repentigny –, where we see fairly significant levels of overbidding, according to Charles Brant. “On the island of Montreal, it is mainly the extremities that are overheated, such as the West Island, the eastern tip, the north of Montreal. »

“In the suburbs of Montreal, it has really been madness over the past two years, also confirms Mathieu Lagarde. There are very few properties for sale, so these are very active markets. »

According to the APCIQ, the number of residential sales decreased by 16% in the Montreal metropolitan area during the first quarter of 2022 compared to the same period in 2021. “The island of Montreal experienced the least significant decrease ( -13%) and the North Shore suffered the most considerable decline (-21%)”, write the analysts.

And that’s where the shoe pinches: supply is no longer sufficient to meet demand. “We have been under-building for years, so with the price of materials which is high and city regulations, we have to find ways to authorize new construction and densify sectors,” adds the broker. Add to this the scarcity of labor and ever-tighter profit margins, more and more developers are hesitant to embark on new projects.

Increases in the key rate — which directly affects mortgage interest rates — and in inflation are thus perceived as the natural solution to the problem of one-upmanship by the experts: the purchasing power of several potential buyers will be reduced, which that will reduce the pressure on a boiling market.


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