Montréal real estate: How to analyze the real estate market

Accueil » Blog » Montréal real estate: How to analyze the real estate market

May 21, 2024

Key facts:

Key market indicators: Track sales, median prices and selling times to understand the dynamics of the Montreal real estate market.

Impact of financing: Interest rates and monetary policy directly influence credit availability and purchasing decisions.

Housing policies: Keep abreast of government and regional policies to adapt your real estate strategy.

Local developments: Infrastructure projects and neighborhood dynamics can increase the value of your property.

In Montreal’s real estate market, indicators, statistics, news and regulations are the order of the day, and it’s often difficult to really understand the dynamics and how to position yourself in this exciting yet unpredictable market.

With more than 20 years’ experience in the industry and several hundred million in transaction volumes, our team of Montreal real estate brokers shares with you their key insights for understanding, acting and profiting from the Montreal real estate market.

Time needed: 7 minutes

Real estate market analysis: Indicators to track.
Real estate market analysis: Financing and economic environment

Real estate market analysis: Indicators to track.

In a world where data plays an increasingly important role, it’s often better to know how to interpret it, and use it wisely.

The real estate market is no exception, with new statistics released every week. Understanding the nature of each indicator, and being able to analyze their fluctuations, is essential to understanding the market.

Here are the main indicators to follow to understand the economic state of the real estate market:

Indicators	Definition	Analysis
Sales	The number of transactions from one month to the next, or compared with the same period in the previous year. It is essential to analyze sales in terms of value, volume and statistical variation to fully understand the state of the market.	– A significant increase in sales means a growing market, with a strong presence of buyers who find satisfaction in the inventory of properties on the market. – A stagnation in sales reflects a market that is stabilizing, finding its equilibrium, or which may be starting to turn around. – A drop in sales means a shrinking market, or a market correction after a significant development peak.
Median prices	The median price for which a type of property (plex, condominium, house, etc.) has sold over a given period. This indicator is essential for buyers and sellers, as it enables them to estimate the price of their property in relation to the market. It should be analyzed in direct correlation with the number of sales to fully understand the economic state of the market.	– A rising median price reflects a growing market, and potentially a lack of inventory and a balance of power in favor of sellers, who are fewer in number and rely on the strong presence of buyers to push prices up. – A stable median price means a fairly balanced market, where buyers and sellers seem to have found a psychologically acceptable price. – A falling median price may represent a market correction after a price peak that buyers no longer consider attractive, or, in the worst-case scenario, a falling market.
Average time to market	This indicator shows the average length of time a property remains on the market before finding a buyer. It is essential for understanding the dynamics of a market and the forces at play, as well as the momentum to act on the market. This indicator is analyzed in conjunction with the median price to understand the impact of the latter and the pricing strategy to be adopted in relation to the market.	– When the selling time increases, it means a market where sellers are numerous and struggling to sell their property, so buyers have the advantage to negotiate and pull prices down. – A stable lead time indicates a balanced market where buyers and sellers are broadly in line in terms of price. – A decreasing time-to-sale means an accelerating market, where buyers and sellers are out in force and properties find buyers quickly, often correlated with a growing market.
Distribution of properties	This indicator shows which types of property are the most sought-after and interesting on a market.	– Less significant, this indicator should be consulted in relation to a neighborhood rather than the city as a whole, to target a neighborhood with regard to your needs or the type of property you’re looking for.
The current inventory	The number of properties of all kinds present on a market over a given period. This indicator reflects the presence of sellers and the dynamism of inventories in a given region. Like the others, this indicator must be put into perspective with the median price and sales. This indicator is also greatly influenced by seasonality, which plays a key role in the market.	A central indicator of market analysis, inventory determines the fluctuations and quantity of goods on a market. – When the price rises, we see a surge in interest from sellers, who feel that this is a good time to sell and realize a handsome capital gain. – When it stagnates, we speak of a balanced market. – When it falls, we consider that market conditions are not ideal for selling your property, in terms of price, economic conditions or selling time.

As you can see, each of these indicators can be used to analyze different levels and aspects of the market, to understand its overall health.

A market in which sales and prices are rising, and sales lead times are falling, is considered to be in good economic health and conducive to the realization of a project. But beware: like any market, correction periods are inevitable, and it’s important to take a broad time perspective in your analysis to make informed decisions.

These indicators will give you an accurate picture of the market, but never neglect the advice and added value your real estate broker can provide to help you make your real estate projects a success.

Rather than searching for this data on your own, you can consult our monthly statistical reports on the real estate market in our blog (The data comes from the APCIQ website).

Real estate market analysis: Financing and economic environment

Intrinsically linked to the real estate market, the economic and monetary health of a country as a whole is a key factor influencing a city’s real estate economic health.

A growing economy inevitably attracts capital, infrastructure development and social progress, all of which have a positive impact on the real estate market. Conversely, a slowing economy will lead to capital flight, limited accessibility for market players, or even a weakening of public services, all of which diminish the real estate appeal of a country, city or sector from a real estate point of view.

Discover the main macroeconomic factors that can influence a market and how to interpret them:

Interest rates and monetary policy

Financing a property has a direct impact on the interest rate at which you borrow.

In addition to the difficulty of accessing credit in periods of high interest rates, which dampens buyers’ enthusiasm, a period of high interest rates tends to make all players cautious and invites them to wait before entering the market, whether buyers or sellers.

Conversely, when borrowing is accessible at low interest rates, the barriers to entry are lower for buyers, making it easier for them to position themselves on the market.

Housing policy and accessibility

Whether it’s a question of building policy, energy-efficient renovation or financial incentives, it’s essential to study government and regional housing policies in detail.

Indeed, real estate is a strategic sector of a country’s economy, and consequently important to governments, which regularly implement policies to promote access to housing, protect tenants/owners or bring certain dwellings into environmental compliance.

Following these guidelines enables us to understand the dynamics and vision of policies in the marketplace, and to adapt our strategy accordingly. The latest flagship measure is Law 31. Click here to read our article on the subject.

Development projects and neighborhood dynamism

Last but not least, it’s essential to find out about infrastructure projects, neighborhood policies and ongoing construction work in the neighborhoods you’re targeting to make the right decision on the market.

Indeed, project development can have a considerable impact on the future profitability or added value of your property. The construction of a metro station, shopping center, park or other building project inevitably enhances the neighborhood’s appeal and increases the value of property in the area. Imagine having purchased a property in Paris 10 years before the Olympic Games and appreciating the major infrastructure works that were carried out to host the event and develop the neighborhood. Today, these developments would serve both the event and, above all, the value of your property, which can look forward to more amenities in good condition all around.

As you can see, studying the future projects and neighborhoods in a given area will help you identify high-potential sectors and increase the profitability and added value of your property.

Conclusion

Navigating the Montreal real estate market can seem complex, but with the right information and analysis, it becomes an exciting adventure full of opportunities. By skilfully blending a statistical analysis of the various indicators presented with a more macro-economic study of market conditions, you get a fair and accurate view of the state of the market.

At Lacasse Shapcott, we’re committed to providing you with the tools you need to decipher trends and make informed decisions. Whether you’re a buyer, seller or investor, understanding key indicators and economic dynamics is essential to maximizing your potential for success.

Every market has its cycles, and being well-informed allows you to take advantage of opportune moments and avoid common pitfalls. Don’t hesitate to call on our team of experienced brokers for personalized assistance.

We’re here to turn your real estate projects into resounding successes.

Kyle Shapcott

kyle@equipels.com

Linkedin | Instagram

Kyle has been an expert on the real estate market for over 10 years. He is passionate about Montreal and the city’s real estate sector, and regularly shares his analysis and advice in his articles.

We put all our energy and passion into our blog posts – check them out!