Condominiums: No Longer Restricted to Large Urban Centres

In recent years, the popularity of condominiums in Québec has spread past the borders of large, densely populated cities and has expanded to smaller urban centres. Last year, for example, in agglomerations such as Saint-Hyacinthe, Saint-Jean-sur-Richelieu and Granby, condominium sales accounted respectively for 20, 14 and 12 per cent of all residential sales.


The condominium market has grown exponentially in Québec over the past decade. Between 2000 and 2010, MLS® condominium sales increased by 124 per cent, compared to 41 per cent for single-family homes and 34 per cent for plexes. As a result, the condominium's share of residential sales in Québec grew from 14 per cent in 2000 to 21 per cent in 2010. Large urban centres were primarily responsible for the strong demand for condominiums, as shown in Table 1, which presents the evolution of condominium sales in various sectors of the province's six Census Metropolitan Areas (CMAs). For example, between 2000 and 2010, the Island of Montréal (see the whole document)


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Also in this issue

 
 

Haut-Richelieu: May Sales Fall Sharply After Floods

No Consensus on the Direction of the Real Estate Market in 2011

Québec Households' Financial Position

International Real Estate Market: How Does Canada Compare?

Seventh Consecutive Price Decrease in the U.S. Housing Market

Main Economic Indicators

 
 
 
 

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Haut-Richelieu: Residential Sales Fall Sharply in May in Areas Affected by Floods

The overflowing of the Richelieu River resulted in a decrease in residential sales in many municipalities in May. More than 3,000 homes were flooded in Haut-Richelieu, paralyzing real estate activity in certain sectors. More specifically, in the areas of Saint-Jean-sur-Richelieu, Iberville and Saint-Athanase as well as the municipalities of Henryville, Noyan, Sainte-Anne-de-Sabrevois, Saint-Blaise-sur-Richelieu, Saint-Georges-de-Clarenceville, Saint-Paul-de-l'Île-aux-Noix and Venise-en-Québec, only 59 sales transactions were concluded in May 2011. This represents a 39 per cent decrease compared to the average of the past five years. Since the start of the 2000s, residential sales in these areas and municipalities have never dropped below 70 transactions.

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Still No Consensus on the Direction of the Real Estate Market in 2011

The table below summarizes the most recent forecasts from different organizations regarding the number of MLS® sales that will be concluded in 2011 across the province. The TD Bank put forward the most pessimistic figures by forecasting a decrease in sales of almost 9 per cent. At the other end of the spectrum, the Canada Mortgage and Housing Corporation (CMHC) is the only organization to predict an increase (+ 0.6 per cent) in sales this year. At the QFREB, we anticipate a decrease in sales of 3.8 per cent. After five months of activity in 2011, the 37,422 sales transactions that have been concluded in Québec represent a 10 per cent decrease compared to the same period last year.


MLS® Sales Forecasts in Québec in 2011

 Organization (date of last forecast) Number of Sales   Variation* 
 CREA (May 2011) 78,000 - 2.6%
 QFREB (January 2011) 77,000 - 3.8%
 Royal Bank (February 2011) 78,100 - 2.4%
 TD Bank (June 2011) 73,200 - 8.6%
 CMHC (second quarter 2011) 80,500 + 0.6%
 * Compared to 80,042 sales concluded in 2010

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Taking Stock: Québec Households' Financial Position

In a report published recently by the Economic Studies department at Desjardins, the sharp increase in Québec households' debt over the last ten years has been supported by a sustained increase in the value of their assets (financial and non-financial). The debt/asset ratio, which helps determine the extent to which a household can cover their debts with their assets, has changed little in the period from 2000 to 2010. The average debt of Québec households stood at $65,000 in 2010, compared to $40,000 in 2000. At the same time, the average value of their total assets stood at $250,000 in 2010 compared to $145,000 in 2000. The increase in the value of properties is the main factor that explains both the increase in loans and in household non-financial assets. Desjardins also points out that 85 per cent of Québec households have sufficient assets to limit the risk of payment default. The financial institution concludes that households' balance sheets have not deteriorated in the past ten years. To view this study, click here.

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International Real Estate Market: How Does Canada Compare to Other Countries?

According to a recent report published by the Scotia Economics department at Scotiabank, residential real estate activity lost momentum in early 2011 compared to the same period one year earlier in most of the 12 developed countries that were analyzed. Uncertainty about economic recovery and a high unemployment rate led to a decrease in the pool of potential buyers in countries such as the United States, the United Kingdom and Spain, despite very favourable interest rates. In Canada, high property prices, the tightening of mortgage insurance rules and the increase in mortgage rates limited demand, particularly among first-time buyers. Canada ranked third in terms of property price growth, with an increase of 5.3 per cent in the first quarter of 2011, behind France (+ 6.8 per cent) and Ireland (+ 12 per cent). In contrast, Spain ( 8.5 per cent), the United States ( 4.8 per cent) and the United Kingdom ( 4.2 per cent) posted the largest price decreases in the first quarter of 2011. Click here to read the report.

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Seventh Consecutive Price Decrease in the U.S. Housing Market

Housing prices in the United States decreased for a seventh consecutive month in April according to the S&P/ Case-Shiller Composite 20 Index, which measures single-family home prices in the 20 largest urban centres in the United States. In April, the Index dropped by 4 per cent compared to April 2010. This decrease in the 20-City Composite Index occurred at a faster pace than in the previous month (-3.8 per cent).


Home prices in the U.S. (measured by the Composite 20 Index) were at the same level as they were during the April 2009 low point.


To view the official Standard & Poor's press release, click here.


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Main Economic Indicators - May 2011


(1) Proportion of people who responded "Yes" to this question.
Note: Green arrows indicate good news and red arrows indicate bad news. The two arrows indicate stability.
Sources: Bank of Canada, Statistics Canada, Conference Board of Canada and CMHC.

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