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The Real Estate Minute Logo 1st Quarter 2023 and the city of Trois-Rivières The Real Estate Minute Logo 1st Quarter 2023 and the city of Trois-Rivières

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.

Contents:

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

Graph of new listings variation in the first quarter of 2023 in Quebec

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.

Evolution of property inventory in Quebec over 12 months as of March 2023

This is however a marked increase compared to the first quarter of 2022, when there were 42% fewer properties for sale in Quebec.4

Fewer transactions

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.

Variation of properties sold in the 1st quarter of 2023 in comparison to 2023 in Quebec

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.

Stats on residential properties in the 1st quarter of 2023, per region

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.

Variable popularity

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:

Single-family homes - variation of median prices in Quebec from Q1 2022 to Q1 2023

For condos:

Condos - Variation of median prices in Quebec from Q1 2022 to Q1 2023

For multi-dwelling buildings:

Mutiplexes 2 to 5 units - Variation of median prices in Quebec from Q1 2022 to Q1 2023

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.

Aerial view of Quebec City

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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1. DuProprio and QPAREB: Percentage variation in the number of residential properties put up for sale throughout the province between January and March 2023 and January and March 2022.  2. DuProprio and QPAREB: Percentage variation in residential properties put up for sale throughout the province between January and March 2023 and January and March 2018.  3. DuProprio and QPAREB: Variation in the average inventory in Quebec for January 1–31, 2023, February 1–28, 2023, and March 1–31, 2023.  4. DuProprio and QPAREB: Variation in the average inventory in Quebec between January 1 and March 31, 2023, compared to January 1 to March 31, 2022.  5. DuProprio and QPAREB: Percentage variation between the number of properties reported sold in Quebec and the number of residential properties listed from January 1 to March 31, 2023, and in the same period in 2022. 6. DuProprio and QPAREB: Percentage ratio between the number of properties reported sold in Quebec and the number of residential properties listed, from January 1 to March 31, 2023. 7. DuProprio and QPAREB: Percentage ratio between the number of properties reported sold in Quebec and the number of residential properties listed, from January 1 to March 31, 2022. 8. DuProprio and QPAREB: Percentage ratio between the number of properties reported sold in in the Montréal CMA and the number of residential properties listed, from January 1 to March 31, 2023. 9. DuProprio and QPAREB: Percentage ratio between the number of properties reported sold in the Trois-Rivières, Gatineau and Sherbrooke CMAs and the number of residential properties listed, from January 1 to March 31, 2023. 10. Percentage of DuProprio properties sold at a price above the last price listed, between January 1 and March 31, 2023, in Quebec.  11. Percentage of residential properties reported sold in under 30 days of listing on DuProprio.com and whose listing date was between January 1 and March 31, 2023, in the CMAs of Trois-Rivières, Québec and Montréal. 12. La Presse, April 8, 2023, Les maisons abordables encore en surenchère?, https://www.lapresse.ca/affaires/marche-immobilier/2023-04-08/les-maisons-abordables-encore-en-surenchere.php 13. Median price of multiplex properties sold in the Montréal CMA, January 1 to March 31, 2023, according to the Real Estate Radar at JLR.ca. 14. Median price of co-ownership properties (condos) sold in the Montréal CMA, January 1 to March 31, 2023, according to the Real Estate Radar at JLR.ca.. 15. Median price of sales of multiplexes (2–5 units) sold in the Montréal CMA, January 1 to March 31, 2023, according to the Real Estate Radar at JLR.ca.