Real estate market forecast August 2024: A rising tide

The most significant statistic for homeowners and future buyers - price - continues to climb. In Montreal, the price of a single-family home has never been higher. Prices are now higher than they were in 2021, at the time of the pandemic. However, not all sectors of the market are affected. The most luxurious properties, those priced over $1,000,000, remain 13% below their peak in the first half of 2022, although this segment is beginning to show more resilience.

One interesting fact is that property inventory is clearly on the rise. There are currently close to 9,000 condos and 2,300 single-family homes for sale in Montreal, an all-time record. Despite this inventory, prices continue to rise. The number of sales is up, especially compared to 2023, but not to record levels like the inventory. How can we explain rising prices if inventory (supply) is up and sales volumes are moderate?

The rise in prices is being driven by a change in mentality among buyers, who are now willing to negotiate more aggressively. Confident that rates should continue to fall, they are being more generous to ensure they acquire a property before a significant drop in financing costs. This rise in prices took place in two stages: initially at the beginning of the year, as soon as it became apparent that rates would eventually fall, and another recent movement, following the rate cuts.

''The second wave will be driven by those expecting a significant rate cut''

If the Bank of Canada continues its rate-cutting policy, we believe there will be a further surge in market prices as more buyers enter the market. The recent 50-basis-point reduction does not significantly change the real cost of financing. Buyers who contributed to the increase did so in anticipation. The second wave will be driven by those who expect rates to fall significantly. The luxury market should follow in the next quarter as the price of less expensive properties rises.