Montreal real estate is the hottest in Canada when it comes to price increases. Outpacing both Toronto and Montreal, there’s speculation it’s the next Canadian bubble. Turns out if you look at the long-term trend, this is pretty normal. During the Great Recession, Montreal real estate peaked after Toronto and Vancouver began tapering. Despite this, Montreal has a long way to go to give investors the same kinds of returns.
Montreal Real Estate Is Significantly Cheaper
First, let’s take a broad look at prices. Montreal real estate prices are significantly lower than Toronto or Vancouver. The price a of a typical home in Montreal is $350,000 as of October. The price of a typical home in Toronto is $766,300, about 118% higher than it is in Montreal. In Vancouver the price of a typical home is $1,062,100, over 203% higher than Montreal. For context, Montreal has more density than Toronto, but less than Vancouver.
Montreal Real Estate Benchmark
The price of a typical home in Montreal, compared to Toronto and Vancouver. In Canadian dollars.
Source: CREA, Better Dwelling.
Montreal Real Estate Prices Don’t Grow Very Fast
Montreal real estate price growth is attracting attention since it leads the country. The price of a typical home in Montreal is 6.29% higher than the same time last year. To contrast, Toronto is “just” 2.64% higher than last year. Vancouver is at just 1.03%. Montreal is growing at twice the pace of Toronto, and six times Vancouver. That’s wacky growth.
Except Montreal has lagged Toronto and Vancouver significantly over the past few years. Montreal’s most recent peak growth was in June 2010, when the annual growth rate hit 8.89%. To contrast, Toronto’s peak was 31.43% in April of 2017. Vancouver reached an even higher 32.61% peak annual growth, reached in July 2016. Montreal might be higher today, but it’s trailing recent peaks… by a lot.
Montreal Real Estate Price Change
The annual percent change for the price of a typical home in Montreal, compared to Toronto and Vancouver.
Source: CREA, Better Dwelling.
Montreal real estate also trails Toronto and Vancouver over the long-term. Montreal prices have gained 41.19% over the past 10 years. Meanwhile, Vancouver is up 96.98% and Toronto is up 113.34% during the same period. In order for prices to catch up, Montreal prices would need to double from here. That assumes flat prices in Toronto and Vancouver.
The takeaway? Montreal real estate prices are cheaper, grow slower, and underperform Toronto and Vancouver. Montreal is home to some of the cheapest real estate in the whole country, despite being a large city. The faster than normal growth observed now is more likely a game of catch up, than a new bubble market.
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Plot twist, Montreal is the only city with normal housing.
The only people claiming Montreal’s real estate market is a bubble are justifying how dumb they were to buy into their own bubble.
There’s an aversion to borrowing money in the french canadians that tempered the effect of low interest rates to a certain degree. The rise in the last 2 years is mostly due to the record low unemployment rate, which is currently at 4.9% for a province that is used to 7-8% unemployment rate.
There’s also a cultural difference between Montrealers and the rest of Canada.
There’s more of a culture of going out rather than staying home and “enjoying” your 600 sqft house. I walked around Toronto recently, and the number of storefronts that are empty is shocking. Compare that to the bustling restaurants you see in Montreal. We’ve resisted adopting the toxic focus on homeownership that has plagues English Canada.
Thank you for this perspective. I am new to Toronto and walk around wondering where on earth the life, bustle, and people are. Even on a Saturday night, high end restaurants and “popular” cocktail spots are practically empty. The shops barely have anyone in them, storefronts in prime neighborhoods are closed. I guess everyone is at home stroking that little slip of paper that tells them they are a millionaire. It boggles my mind why people would want to buy an overpriced home in a great neighborhood when they can’t even enjoy what it offers. Do they just watch from the window?
They can’t afford to go out as their credit cards are maxed, paying off two new car loans, and a million plus mortgage on top of that.
Montreal’s prices are rising because of foreign buyers. As soon as they eat all of the supply, it’s going to skyrocket like Vancouver and Toronto.
https://montrealgazette.com/business/local-business/real-estate/real-estate-montreal-is-new-hot-spot-for-chinese-buyers
There’s way more land to develop in Montreal even around the existing subway stations. With the REM train coming up and the number of lots that could be converted to residential from light industrial (i.e Assomption Metro) we have the land and manpower to meet the demand.
Nice charts…
It would be nice to see these charts normalized to local conditions, i.e., the affordability multiple for “typical” (median?) local salaries looks like…
Montreal is a city of renters. Salaries are also shockingly low compared to other large cities. Annual income and property taxes are also very high. Its bound to affect RE prices.
Ex-Montrealers have been buying downtown condos as investments though, based on the chatter I hear at family engagements. Especially near the Bell Centre. Seems I’m the only one without a condo in town. Silly me stays with family when I’m in town.
In the 2010 census the median family income for the census metropolitan area was :
Calgary 104,401$
Edmonton 101,870$
Ottawa 96,135$
Toronto 78,373$
Montreal 76,950$
Vancouver 72,662$
Shocking. It really explains why detached homes in Vancouver are worth 5.7 times more than Montreal on average…
Just to contradict myself, these data were from the 2010 census, the 2016 census is way off these figures (they must have changed methodology). 2016 numbers:
Calgary 99.6k
Toronto 78.4k
Vancouver 72.6k
Montreal 61.7k
My point stand though. A person working a similar job in Montreal vs Vancouver gets paid roughly the same, and if they buy the same house the price is way out of whack.
The four legs of a good economy are weakening….closing in on the end of the real estate cycle, cheap oil, closing down of factories with good paying jobs..interest rates that will eventually have to go up. its beginning to look like the perfect storm that all level of Governments are dreading..is this what it takes to spur concern or even panic among the masses. It already takes twice as long to sell a home as it did a year ago and that is with taking a hit on the original listing price..If you need to sell take the initial hit right away sell for less of suggested to get it gone and be around to buy again in a year or two when the market falls back to where it was 5 years ago.
You are correct DB…the pop is starting and its going to get real ugly…get out of debt and fast…as for housing, its no longer an asset, its a liability if you purchased over the last 10 years…we will have a big drop in housing prices as interest rates rise all over the country and as for Quebec, again, no thanks…bills 22, 178, 101…really, lollllllll, never move to Quebec period.
Spend more time reading. Different news sources and perspectives. Demographic shifts. Migration. Read the comments. Think and scrutinize. I’ll even crack open articles/white-papers from 30 years ago if available. A bit of money moving to a dead hole does not a bubble make. With all the froth it was just a matter of time before some of it trickled east. I urge everyone to go back 4 years and read up about some of the US markets which are now correcting (are they?) and track them to get an understanding of what could happen. These articles mention census data regarding incomes and rent/properties prices. Great sources of info. Rather than throw shade at BD or get into scuffles with whatever vagrant stumbles in here pumping ‘infinity and beyond’, try to extract what you can and move on. Yes, I am the pot talking shit about the kettle but honestly, understand history but do not be ignorant to the future…buckle up. Tick tock. BD4L.
Montreal is very different. There is a language barrier that keeps the population stable. English people are enticed to leave and bilingual French people can find better opportunities elsewhere. The rents are also much lower for this reason. You can’t really compare to Toronto & Vancouver. There has been some talk about increased foreign investors, but it is below 2%, and I would bet that they don’t really understand the Quebec political situation.
The article needs to take the divide into account – the Real Estate in Montreal is VERY different between Anglophone neighbourhoods (from Downtown to the West Island) vs. the Francophone neighbourhood (Eastern Montreal, which is 2/3 of the Island). For some perspective, the median price is nearly double in Anglophone areas – which is where all the foreign investors are investing in, where the core of the REM is, and also where the upcoming mega-mall is being built.
If you take the eastern franco Montreal out of the picture, you will see a drastically different picture.