1st Quarter 2023 Real Estate Stats: A fragmented market in the province
Published on May 1, 2023
Quebec’s real estate market is stabilizing. There has been no new increase in the key interest rate by the Bank of Canada other than a slight 0.25-point increase on January 25. Exceptions aside, the factors that impact Quebec’s real estate market remained the same in January–March 2023 as in the last 3 months of 2022.
How does 2023’s first quarter compare to the last quarter of 2022? Find out by reading the previous issue of The Real Estate Minute!
The new thing is regional differences! For a long time, the market moved at the same pace province-wide, but we are now seeing increasing disparities between areas. Here is our analysis of the statistics for the first quarter of 2023 and our forecast of what’s coming next, in The Real Estate Minute.
- Fewer new properties on the market
- The inventory continues to rise
- Fewer transactions
- Different realities in different regions
- Bigger impact on selling prices in expensive markets
- Trend analysis and a look forward
Fewer new properties on the market
While, often, the beginning of the year is characterized by an increase in the number of properties put up for sale in the province, the start of 2023 was different. Between January and March, buyers had 9% fewer new properties to choose from than in the same period of 2022.1
The decreasing trend in new listings, which has been observed for a few years, was confirmed at the end of March 2023. Indeed, in the first quarter of 2023, there were 33% fewer new property listings than in the same period 5 years ago.2
The inventory continues to rise
Even though there were fewer new properties on the market in Quebec in the first quarter of 2023, the inventory of all properties for sale still continued to rise. The number of properties on offer has been increasing by about 3% per month since the end of last year,3 so aspiring homeowners had more selection for their purchase.
This is however a marked increase compared to the first quarter of 2022, when there were 42% fewer properties for sale in Quebec.4
One of the reasons explaining the increased inventory in the province is the sharper decrease in the number of real estate transactions taking place in the year’s first quarter. A 32% drop in the number of properties sold was observed in January–March 2023, compared to the same period in 2022.5 Note however that the number of real estate transactions in the first quarter of last year was exceptionally high.
This slowdown in the number of sales is particularly noticeable when we look at the percentage of transactions compared to the number of new properties listed. This calculation gives a picture of the real estate market’s strength in a given period. According to the CMHC’s market assessment methods, a ratio of over 55% is characteristic of a seller’s market, and a ratio over 70% indicates an overheated market. For the first quarter of 2023, the percentage of properties sold relative to new listings was 59%,6 which is significantly lower than in the first quarter of 2022, when the ratio was 77%.7
Different realities in different regions
Not so long ago, quarterly statistical analyses were simpler due to the relative similarity between Quebec’s different regional markets. However, in the first quarter of 2023, we observe that the market is reacting differently by area. The slowdown has had little or no impact in some places.
The Montréal census metropolitan area (CMA) was most negatively impacted, with a ratio of properties sold to new listings of only 53%,8 the lowest in the province. At the other end of the spectrum, CMAs like Trois-Rivières (79%), Gatineau (68%) and Sherbrooke (65%)9 enjoyed rather vigorous real estate markets during the year’s first quarter. The Trois-Rivières region is the only one in Quebec to have shown signs of an overheated market between January and March 2023.
Non-negligible overbidding phenomenon
While the real estate market was calmer in the first quarter, as compared to last year, there were still 15% of properties listed on DuProprio.com that reported selling higher than the last price listed.10 It’s important to recall that selling above listing was a relatively nonexistent phenomenon prior to 2020.
The CMA of Trois-Rivières also stands out for the percentage of properties listed on DuProprio.com that sold in under 30 days, in 2023’s first quarter. At 53%, this is considerably higher than in the area in second position, Québec City (43%), and is higher by far than in Montréal, which, at 21%, was the region that had the lowest number of fast sales.11 All in all, the Trois-Rivières region had the best statistics at every level during the quarter.
It is clear that despite the overall increase in the number of properties on offer, some types of products and some price ranges are still more highly sought-after. This is the case for so-called affordable properties, notably since the number of these properties available is limited compared to the demand.12
On another front, the difficulties faced by multi-dwelling properties in the last quarter of 2022 continued into the first quarter of this year. In fact, the sharp slowdown reported in the last issue of The Real Estate Minute still applies.
Bigger impact on selling prices in expensive markets
Selling price has been what everyone’s talking about across the province for many months. After peaking in many areas at the end of the second quarter of 2022, the impact of the multiple hikes in the key interest rate was felt. Once again, price trends varied by area.
We observe however that, in general, the markets where property prices were highest, for instance Montréal and Gatineau, also experienced the fastest decline after peaking in 2022. The drop in these areas contributes to the decrease in the provincial average. Conversely, areas where the real estate market has historically been slower, like Saguenay, Sherbrooke and Trois-Rivières, are now experiencing greater strength and maintaining similar prices to the record prices from last year.
Despite these observations, a drop in selling price in the first quarter of 2023, relative to the highest quarterly median price of 2022 can be seen Quebec-wide for single-family homes, condos and multiplexes. But there are a few exceptions.
For single-family homes:
For multi-dwelling buildings:
The CMA of Montréal still held the record for the highest median prices in the first quarter of 2023, at $500,000 for single-family properties,13 $395,000 for condos14 and $665,000 for buildings of 2–5 dwellings.15 At the other end of the spectrum, the most affordable region continued to be the Saguenay.
Trend analysis and a look forward
The trends observed in the year’s first quarter—and even before—should continue to dictate the real estate market realities in 2023. This applies equally to trends for numbers of sales transactions and for property prices. According to a study published on March 2 by Mouvement Desjardins, fewer first-time buyers are buying properties in the current market; the same applies to local and international investors. The median property price could therefore continue to drop over the coming months of 2023, but should remain higher than pre-pandemic levels. The regions likely to be most affected are those that experienced the strongest overbidding phenomenon in spring 2022, like Montréal and the Outaouais, while other places, like the Québec City area, could benefit from greater stability and even an increase.
Still according to this study, we can expect a gradual strengthening of the residential real estate market in 2024, as a result of improved affordability driven by potential drops in mortgage interest rates and price corrections that took place in 2022 and are continuing in 2023. Generally, in the province, it is possible that we will have to wait until 2024 to see residential property prices slowly increase.
In the meantime, remember that a well-maintained property in a sought-after category and with a fair, justified price will sell regardless of the real estate market. All it takes to sell or buy a residential property in 2023 is adapting your marketing strategy and following good practices.
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