This week on CIBL’s Les Oranges Pressées, we look again at the contradictory data of the real estate market, which has some consumers confused.
At the end of this rather gloomy year of 2015 for the real estate sector, 4 factors must be kept in mind to start 2016 with complete peace of mind.
In the coming years in Montreal, the real estate market will be influenced essentially by 4 variables:
1- sales statistics data
2- data concerning buyers of new condos downtown
3- home ownership measures
4- tightening of mortgage rules for the granting facts by the federal government
As the New Year approaches, a good resolution would be to question the sales statistics released in the media. Indeed, these data are extremely variable from one source to another and do not always reflect reality. The real estate market is a sector of microscopic economic data that is incompatible with general statistics. Thus, it is very likely that a house on Fabre Street costs more than another house on Iberville Street, even though it is of the same value.
In the district of Ville-Marie, for example, the growth in the number of offers has caused properties to lose value. Consumers can easily be misled by statistics they have read or heard in the media. And for good reason, it is impossible to detect these microscopic details of the real estate market with the unaided eye! Calling on a broker is the best solution to avoid falling headfirst into the numbers.
Access to home ownership, difficult in 2015
Since the federal government has limited and regulated access to home ownership, acquiring a home has become increasingly complex. Buyers no longer have subsidies and although the interest rate is low, they need a higher down payment ratio. This accession is even more difficult for young people. If they wish to obtain the help of their parents for this transaction, they must have equity on this property. Apart from this support, there are no subsidies for young people.
Despite these negative points, the real estate market is still to the advantage of buyers and is all the more favourable in Montreal than elsewhere in Canada. For example, the federal government’s recent measure on home ownership of more than $500,000. The principle is to ask for a 5% down payment for the first $500,000 and 10% for the second part of the purchase. This measure should calm the market sector in cities such as Vancouver or Toronto, which are particularly affected by home ownership.
We can end on a positive note since the forecasts for 2016 predict a market that will continue to benefit buyers, abundant offers, an interest rate that will remain low and new condos that will continue to be sold!