Due to a mix of low inventory, comparatively lower prices, a solid economy and a growing number of foreign investors, Montreal’s real estate market is now experiencing housing price appreciation above the national average.
This surge in pricing is also bringing another nemesis for prospective buyers: bidding wars.
In a nutshell, a bidding war happens when buyers try to outbid each other over the same property. Bidding wars are a significant source of stress among buyers, but a welcome boon among sellers, who stand to make a higher profit on the sold property. It’s not unheard of sellers receiving offers that are 5% to 10% to as much as 20% over list price during typical bidding wars.
While we often hear of bidding wars taking place in Toronto and Vancouver‘s real estate market, Montreal hasn’t seen a significant number of them in seven years. But the tables have turned. While Toronto and Vancouver real estate markets have seen a significant decrease in sales and an increase in unsold inventory since January 2018, Montreal’s market is now steadily gaining altitude.
According to the Greater Montreal Real Estate Board, July of 2018 marked the 41st consecutive month of sales increase. Bidding wars are particularly common in Montreal’s West Island, where nearly 25% of homes sold over their original listing price in the last quarter.
Factors that have favoured Montreal’s real estate market recent price growth include an increase in political stability in Quebec, an increase of foreign buyers looking to avoid the foreign taxes on Vancouver and Toronto, and a lack of new housing development in the area.
While it’s true that Montreal’s bidding wars are pale in comparison to what we see in the country’s once-hottest markets — Toronto or Vancouver — the recent trend towards bidding wars in Montreal doesn’t appear to be abating. Many industry specialists believe this state will actually continue and may even worsen over the next six to nine months.
Eventually, the impact of higher interest rates, an increase in new listings and the release of newly built constructions projects will help to balance the market, making it easier for buyers to find a home and putting downward pressure on homes currently for sale. But until then, buyers are in for a stressful, competitive market in this popular Quebec city.