If you are thinking about entering the Montreal real estate market, you may be wondering if Montreal is in a buyer’s or seller’s market? You may even wonder what are the key difference between a seller’s market and a buyer’s market? In this article, we are going to discuss everything you need to know about buying and selling power in different market conditions. In addition to technical information, we are going to also discuss some trends that we often find in the thick of these markets. This article will discuss how to know if we are in a buyer’s or sellers market in Montreal.
Some factors which influence a home’s price and the market conditions are:
- location
- type of home
- condition
- interest rates
- unemployment rates
- population growth
- affordability
Stemming from those 7 factors is the simple law of supply and demand, which will be the number one predictor of market conditions.
Sales to New Listing Ratio
We’ll start with the math of determining what kind of market we are in. This information is purely technical and not necessary to comprehend when you are buying or selling a home. But if you are a numbers junkie (like me), then keep reading and you will quickly understand how to tell if Montreal is in a buyer’s or seller’s market. The ratio real estate experts use for a given time period is:
# of homes sold / # of new listings
When the result of this ratio is less than 0.4, it is presumed to be a buyer’s market. When the ratio is greater than 0.6, it is presumed to be a seller’s market. Anything in between 0.4-0.6 is a balanced market. The chart above illustrates this information and will show the ratio over time from January 2020 to last month (June 2022).
The Seller’s Market
When there is more buyers (demand) than homes for sale (supply), it is considered a sellers market. Sellers are able to take advantage of quick selling times. Buyers are willing to accept less than favourable sales terms to ensure their offer is accepted. Bidding wars (a.k.a multiple offers) are common in a seller’s market and buyers are frequently willing to pay more than the asking price in order to win those bidding wars. Sellers are in the driver’s seat and buyer’s frequently need to rush to visit new listings or they may lose their chance. Buyers will need to entice sellers by making their offers as uncomplicated as possible. This may involve figuring out how to write an offer without a condition to sell their current home. Some buyers will even waive the
inspection condition and/or mortgage condition.
The Buyer’s Market
In a buyer’s market, there are more homes available (supply) than there are buyers (demand). The average selling time will increase to possibly months, resulting in homes sitting on the market for an extended period of time. Buyers will have more homes available to them and be able to do their visits at a slower pace and be able to reflect on the homes they visit as a result. Asking prices will be negotiable. Sellers will need to entice buyers by pricing their homes correctly and making their homes more attractive by investing in staging or strategic marketing tactics.
Decluttering is a must and the first passive step any person should take when thinking about selling their home.
The Real Estate Broker Advantage in Montreal
When you work with a Montreal broker who has been in the business for many years, you benefit from the experience they may have had in a previous buyer’s or seller’s market. A broker can help you understand the market conditions and what the best tactic to reach your real estate goal is. This will save lots of time and will lessen the learning curve. Additionally, a good broker works in the clients best interest only. For example, in a seller’s market they will ensure that buyers who waive the inspection, do so safely. Furthermore in a seller’s market a broker can properly advise what the seller can do to increase the likelihood of a good sales price and what would be a waste.
A Note to Buyers: Get Pre-Approved
Regardless of the market, a mortgage pre-approval is your best friend (but especially in a seller’s market)! It protects you from interest rate increases and will tell you what you can afford. This is useful in any market. It will also strengthen your offer. As a result, the home-seller feels more inclined to do what it takes to get your offer accepted.
Montreal’s Current Situation (up to June 2022)
In the chart above, you can see what you have been hearing on the news for the last few years. We’ve been in a strong seller’s market. But you will notice in the
last month, the market has shifted to a balanced market. Only time will tell if the pendulum will swing deeper towards a buyers market for the first time since 2017.
Want to know more about where the real estate market is heading? We love to inform and share information. Contact us today.
