Why is housing in Montreal so affordable?

With home prices continuing to climb steadily upwards - especially in Toronto and Vancouver - CBC this week said that it’s a different story in Montreal. Canada’s second largest city continues to offer housing purchase potential that is on average priced $100,000 less than the national average.

The average resale price of a home in Montreal was just under $50,000 in 1980, when prices in Vancouver hit more than $100,000 and in Toronto nearly $75,000; the Canadian national average was then $67,024. A decade later, Montreal began to hit Vancouver’s 1980 levels, as Vancouver hit more than a quarter million and Toronto even more.

At $110,045, Montreal’s average home price was lower than Quebec’s provincial average of $100,811 in 1990, and substantially lower than the national average of $142,000. At the turn of the century, while Vancouver prices hit nearly $300,000 and Toronto more than $240,000, Montreal had climbed to just $125,499.

Forecast prices for this year are $338,500 in Montreal, compared to $612,000 in Toronto and $887,600 in Vancouver, as compiled by The Canadian Press from CMHC, Quebec Federation of Real Estate Boards and Canadian Real Estate Association numbers. The national average is projected to be $433,600.

Montreal is a terrific city, with lots to do, lots to see and an old town unsurpassed in Canada for European charm, with the possible exception of Quebec City. So why the vast price difference?

The CBC posits that political instability is often cited as the reason for lower home prices in Quebec, but experts are offering some different ideas, namely lower levels of immigration, weaker incomes and employment growth, coupled with a traditional preference for renting (which condo development seems to be turning around).

Fundamental “growth drivers” like the age of core buyers, economic strength and interest rates are more “supportive” of housing growth in Toronto and Vancouver, according to CMHC chief economist Bob Dugan. Language policies that restrict who can attend English-language schools are a deterrent to companies’ locating there who are challenged to attract desirable employees, according to one finance professor at McGill.

Not that I would encourage anyone to move away from the GTA — it is the centre of the universe, after all — but new condo pricing in Montreal is certainly tempting, especially if you’re able to telecommute and don’t mind being cold (as a friend of mine once said, “There’s cold, and then there’s Quebec cold”).

I surfed around looking at some new developments online and it isn’t unusual to find new condo units with views of the river, a wide range of amenities, with terraces and parking spots aplenty starting at less than $160,000, with many two-bedroom units barely hitting the $300,000 mark, which certainly makes Montreal a bargain compared to other metropolitan centres across the country.

Will Montreal property values ever catch up? If historical data continues to forecast the future, then no, but it’s certainly worth considering, especially if you’re young, dressed warm, and ready for adventure.

"Toboggan at Terrasse Dufferin" by Bwilly11 - Own work. Licensed under CC BY-SA 4.0 via Commons

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Our unstoppable housing market continues to gather strength, with housing starts up in November and building permits up in October, proving the “bubble-must-burst” naysayers wrong for a while longer. A CMHC report issued yesterday says condos in Ontario and the Prairies in particular have left economists scratching their heads.

“The strength in Canadian housing construction this year has been somewhat of a mystery,” Derek Holt, vice-president of Scotiabank Economics, says in a release. Who doesn’t love a good mystery?

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The jet debate at Billy Bishop officially died yesterday, as the port authority issued a statement saying that it has stopped work on an environmental assessment and a pair of studies requested by city council in spring 2014.

“PortsToronto will complete the technical work currently underway, but will not proceed with further public engagement-related activities pertaining to the Porter Proposal to introduce jets,” says the statement. “As such, the studies will not be finished. PortsToronto will make data and information gathered to date available to the City of Toronto and stakeholders that may be helpful to the Bathurst Quay Neighbourhood Plan currently being led by the City of Toronto.”

The initiative to fly jets in and out of the island airport initiated by Porter Airlines in 2013 would have seen the runway expanded 550 metres into the harbour, and allowed 5.5 million annual travellers, up from 2 million.

Feature image: "OlympicStadium" by Antoine Mghayar. Licensed under CC BY-SA 3.0 via Commons