After slowing down through the summer, the second wave of COVID-19 began in Canada in September, in line with the predictions of experts earlier in the year. They rightfully anticipated that the back-to-school commotion, along with influenza season, would herald the another onslaught. While restrictions are not as strict as they were in March and April, the reinforced social distancing measures have strangled the economy as small businesses must once again deal with lower sales and a lack of traffic, as many people have been out of work since the middle of March. CERB, or the Canada Emergency Response Benefit, was nice while it lasted, but the fact remains that a large portion of the population has had to cut down on non-essentials, limiting their spending to only those purchases that are necessary. However, for those that were well-off before the pandemic, 2020 has been a year of investment, and this is best reflected in the Montreal real estate market.
Montreal has been one of the hottest markets in Canadian real estate in recent years, with a steady flow of immigration into the city paired with prices that are consistently lower than Toronto. Nevertheless, old records were broken and new records were set as the Montreal housing market saw significant increases in price and sales across the board. The median price of homes in the Central Montreal Area has jumped to $430,000, a 21 percent increase from where it was last year. The luxury housing market in particular has done extremely well, with more than 100 multi-million dollar sales from May to September. To put that into perspective, between January and May, there were a total of 35 sales in the multi-million dollar category.
Westmount, which is known to be one of the high-end neighbourhoods on the island, has had more than 5 sales in the $5 million plus market this year, which is both astonishing and unusual to see. There was one sale in particular that was eye-catching; the home itself sold for $7 million, and the buyer already had a $7.5 million condo in the heart of Montreal. He said that he had been looking for an opportunity to purchase a second home a bit further away from the downtown centre, but this one had the balance that he was looking for.
Taking a closer look at the distribution of sales, it becomes apparent that there is a disparity across the regions in the city. In fact, new condominium listings on the Island of Montreal were actually up 72 percent in the third quarter of 2020, and developers have had so much trouble selling them that they have handed many of them off to brokers. Prices have continued to appreciate, but sales are nowhere near the level of single-family homes further away from the heart of the city.
…as many people who work in the busy heart of the city have expressed their desire to get away from the chaos
Tying this altogether, we see the indications of a shifting market; more houses are being sold in the suburbs and in wealthy neighbourhoods, while downtown real estate continues to open up. Looking at other markets, specifically Toronto, this trend has been building up for a while now, as many people who work in the busy heart of the city have expressed their desire to get away from the chaos. In addition, the baby boomers are now heading into retirement, and their exodus to quieter neighbourhoods is another sign that people no longer want to live in busy areas.
However, expressing a desire to leave and actually leaving are two completely different things. For those who worked in busy downtown offices, staying close to the action made the most sense logistically and financially. But COVID-19 has changed the dynamic of work across the world. Many businesses are warming up to the idea of more permanent changes in their organizational structure, including working-at-home policies that will require less people to physically come into work even once the scare of the pandemic is over. This change in the work paradigm is the motivation that those with financial stability needed to finally move out of the city.
The coronavirus is changing the world in ways that we could have never expected. The real estate market has been especially volatile, but looking at the numbers and past data, there was an evident trend that buying preferences were already changing in large cities. COVID-19 is now acting as a catalyst, accelerating and accentuating this shift, and for now, all we can do is wait and see for what other changes lie ahead.