Friday, June 18, 2010

Bursting the Myth of the Real Estate Bubble

If I had a nickel for every time someone has said they were waiting for Montreal's real estate "bubble" to burst, I'd have enough money to buy one of those fancy lattés instead of a Timmy's double-double.
The myth of the bubble is the single biggest misconception I battle as an agent. I can talk until I'm blue in the face about fundamentals like interest rates, job creation and demographic shifts and the impact they have on the local housing market but I guess I have all the credibility of a used-car sales person. "Trust me! I'm a real estate agent."
OK, so don't believe me. But take a peek at this column by Gazette business scribe Jay Bryan. He puts his boots (more like LL Bean mocs, actually) to the myth of the housing bubble

Here's an interesting point to note about the Montreal real estate scene. The number of properties for sale in May, the last month for which there are statistics, fell by 16 per cent compared to a year earlier. That might have to do with nervousness. It's also true that if people don't list, other people don't list and next thing you know, there's a shortage of listings. A classic Catch 22.
That shortage of listings translated into an 8-per-cent drop in sales. Still, despite the inventory squeeze, the volume or total dollar value of sales rose by 1 per cent compared to May, 2009. Prices for houses, condos and plexes were up 8 per cent, 7 per cent and 11 per cent respectively, according to the Greater Montreal Real Estate Board
Not too shabby


  1. Not sure I totally buy what you're saying but... well you present it well, did you ever think about writing for a newspaper?

  2. Trust me on this Mary...I huge burst is coming so you had better sell your Mercedes and start filling out a job application at Starbucks because your job will be a thing of the past in the not oo distant future

  3. Thanks for the heads-up, Bryan. I actually drive a Ford. though. I wonder if your other insights are more, um, insightful.

  4. Lot of detached 50 year old Magil home up for sale in Pointe Claire now in August selling 310 000-340,000.last year they were going for about 260,000.
    and they dont seem to be selling that fastand more aare coming on the maeket every week No wonder Vaudreuil entices the young families and is the fastest growing community in quebec,new homes at the same price or much less and Walmart close by.West Island on island has outpriced itself for upcoming young people.Everybody I know at work(in their late 20's or early 30's is choosing to go off island laval or vaudreuil,ste lazare.Better houses at reasonable price and hopefully better train service.
    Location may sell but old moldy, makeover homes with asbestos insulation and old oil furnaces just doesnt interest me ,not at 310,000, Lot of these homes seem to be estate sales or retired people moving out.

  5. Hey Anonymous!
    Thanks for dropping me a line. When you talk about 50-year-old Magil houses, I imagine you're talking about those solidly built and spacious split-levels. They don't linger on the market long because they are well designed and well built and located in established neighborhoods with parks, schools and public transit. Vaudreuil is a good option for some young buyers but if you work in the city, you can look forward to spending your life in traffic
    As for prices, scanning the MLS solds, something I can do because I'm an agent, I see about 20 split-levels in central Pointe Claire that sold between $255,000 and $299,000 since the beginning of 2010. There's all kinds of properties for all kinds of budgets.
    It's true, builders are very smart about designing new homes with all the eye-catching bells and whistles. If you're happy with Vaaudreuil, why worry about the prices people are willing to pay in Pointe Claire?

  6. Hey your l gazette link doesn't work - can you update it ?

  7. Sorry Ridha, the link is more than a year old and has expired.

  8. I wonder, does real estate go up forever? Wages are at a stand still. How much longer can this go on for? Any updates to your thoughts on the matter?

  9. Hi Anomymous,

    No, prices don't go up forever. Wages are stagnant and Montreal's real estate market is now plateauing in terms of prices and inventory. I still reject the idea that we were in a bubble. After all, the blog post above is from three years ago. The change in mortgage lending rules, aimed at cooling the housing market and discouraging people from taking on too much debt, has had the effect of sidelining a certain number of first-time buyers.

    An excellent time to buy, if that is your inclination. Lots of deals out there. Give me a call!

  10. I am a different anonymous from the previous poster. It's 2014, and prices have stayed the same in my area. Do you think it's best to wait for the market to go back up in a year or two or is it a good time to sell now?

  11. Hello Different Anonymous!

    Yes, times have changed. The market stagnated for a good long while. Funnily, that dry spell seemed to correspond almost exactly with the PQ's arrival in power and ended when the people of Quebec sent them back out to pasture. Go figure.
    The latest report from the CMHC shows a surge in new home construction in Quebec and an uptick in sales.
    The days of 10-per-cent price appreciation year over year are behind us for now. If you are ready to sell, the price you get this year will likely be about the same as you'll get next year, or in two years, give or take a slight increase to account for small price appreciations.
    Thanks for writing.


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