Are the buyers least able to pay dearly still the ones who are forced to outbid?

A recent rumor circulating in the streets was that the affordable home segment was again subject to one-upmanship this spring, despite the slowdown in the real estate market.

Is that the case ?

First observation, although they are called affordable houses, they are still just as difficult to approach. On April 5, a search on the Centris real estate platform showed 97 single-family homes for sale on the island of Montreal in the $300,000 to $450,000 range.

The $450,000 to $600,000 segment had 324 registrations.

Several of these 97 less expensive properties were located in the east of the island, in the Rivière-des-Prairies and Pointe-aux-Trembles sectors.

Let’s see what happens there.

From $300,000 to $450,000: 97 registrations

From $450,000 to $600,000: 324 registrations

From $600,000 to $750,000: 334 registrations

From $750,000 to $900,000: 349 registrations

“Yes, what we see on the ground is still the multiple offer in the property that is said to be affordable,” notes Mélissa Lampron, general manager of the RE/MAX D’ICI agency, which notably covers the eastern tip of the island of Montreal and the cities of Terrebonne and Repentigny.

There may be a linguistic escalation. Is active market synonymous with overbidding?

“In fact, the appropriate term would be simultaneous offers or presentation of multiple offers, describes Mélissa Lampron. That doesn’t automatically mean overkill. This does not mean that we will have prices offered above the asking price, but very often, this is the equation that is made. »

A drop in price has indeed been observed, but it has mainly occurred in mid- to high-end properties.

“As for the eastern tip of the island, for a single-family property, we are talking about a median price of $465,000, but an average price of $515,000,” informs the director.

“Yes, there is a small price correction. In the sectors you are talking to me about, we are in about a 2 to 4% loss in value in the median prices. But it’s nothing major, and it’s not at all what was announced. »

A classic bungalow, on 15th Avenue, in Pointe-aux-Trembles

Construction : 1962

5408 ft⁠2 lot

10 rooms including the basement

A view of Street View, filmed during the beautiful season, shows a typical suburban street, lined with mature trees.

The asking price just fits into our affordable $300,000-$450,000 range: $449,900.

Let’s check to the south of the island, this time in the Saint-Jean-sur-Richelieu region.

“You hit the mark. For anything under $500,000 that is priced right, we are almost always in a situation of multiple offers,” asserts Alexandre Desrochers, president of Royal LePage Excellence, an agency located in Saint-Jean- sur-Richelieu and has 42 brokers.

Around this municipality, 60% of the properties put up for sale are the subject of multiple offers, he estimates.

Nothing to do with the frenzy of the pandemic period, however.

“It’s not 10, 12, 15 offers anymore. We can speak of one to five offers for most of the remaining overbid situations,” explains Alexandre Desrochers, himself a broker.

In an overbid situation, however, the bonus is significantly smaller than a year or two ago. “Before, we were going up to $50,000 or $100,000 at the top of the price, but we are no longer there at all. We’re about $1,000 to $10,000 above the price these days. »

From $300,000 to $450,000: 53 registrations

From $450,000 to $600,000: 73 registrations

From $600,000 to $750,000: 56 registrations

From $750,000 to $900,000: 38 registrations

The number of registrations in the Saint-Jean-sur-Richelieu region has doubled over the past year. “During confinement, we were at 125 registrations, currently we are at around 300,” says Alexandre Desrochers.

“On the other hand, it does not change absolutely anything, he adds. At 500+ registrations, we would see more balance, but we haven’t gotten there yet. »

The market will remain favorable to sellers for at least another year, predicts the president of Royal LePage Excellence, despite the slight price correction he is also seeing in his market.

“Let’s take for example a property that was listed at $425,000. We knew it was going to sell for $500,000. Today, that property might sell for $435,000. There is a drop, but only compared to the height of the confinement. People are still satisfied with the price at which properties are valued. Me, I call it the bubbles in the champagne: the champagne is less effervescent. »

But we are not yet talking about a real estate bubble.

Yes, there is still escalation, bids an analyst.

“The proportion of overbidding is still much reduced in the overall market compared to what it was last year, but there is still some overbidding, you have to be aware of that”, confirms Charles Brant , Director of the Market Analysis Department at the Professional Association of Quebec Real Estate Brokers (APCIQ).

“Really significant overbids, that is, when sales are made 10% and more above the list price, represent maybe 5-10% of transactions, depending on the market,” he notes. .

These multiple and simultaneous offers are more concentrated in properties that are trading around the median price of the relevant market.

“And inevitably, it affects properties that are perhaps more affordable, which are mainly properties that are offered for sale at a fair price, and not at an exorbitant price or which refers to comparables from a while ago. six months,” says Brant.

In the Montreal area, price negotiations affect 15 to 20% of transactions, estimates the analyst. “There is still relatively little trading in a market that is in a sharp downturn,” he notes.

A price that has nevertheless decreased over the past year.

“The price of single-family properties peaked in Montreal in April 2022,” recalls Charles Brant.

The median price of single-family homes in the Montreal area fell 5% in March compared to the same period last year, according to the most recent data released by the APCIQ this week.

A drop which, compared to the cataclysmic forecasts, “is not that terrible,” judge Charles Brant.

The median sale price for a single-family home was $535,000 in the Montreal area in March 2023. During the same period, the price of Montreal condos fell by 5%, while that of plexes fell by 8 %.

Despite rising interest rates, “there hasn’t been a tsunami of new listings coming onto the market from people who were no longer able to pay their monthly payments,” the analyst said. That’s not what happened at all.”

Instead, the market became crowded with less attractive properties that did not find takers.

“The others were able to trade at the list price, i.e. without too much downside trading. This is why we now realize that the March 2023 prices for single-family homes are not much lower than those we knew last year at the same time. »

According to the most recent report by TD Bank’s economic services, published on April 4, the number of transactions on the Quebec market, after a drop of 20.4% in 2022, is expected to decrease by a further 20.5% in 2023, before to experience a recovery of 6.7% in 2024.

By comparison, the Ontario real estate market, which collapsed 32.3% in 2022, is expected to decline another 8.1% in 2023, then recover 18% in 2024.

TD still forecasts that the average price of Quebec houses, which had increased by 9% in 2022, should yield 4.2% in 2023, then regain 1.8% in 2024.

In Ontario, the average price is expected to decline 8.1% in 2023 before recovering 18% in 2024.