What's happening to Montreal's downtown condo market?
The median price of a condo jumped 3 per cent on the island in the past year, but it's fueled mostly by sales in the suburbs.
The downtown market is much slower.
'One developer was telling me as a joke that his biggest competition in the new condo market was not other developers, but it was a condo he built five years ago,' Francis Cortellino, an economist with the Canada Mortgage and Housing Corporation, said.
Recent numbers from the CMHC show just how tough the downtown condo market is. The CMHC says 25 per cent of recently built condos in downtown and Griffintown would now sell at a loss.
If the owner decides to rent it out, the CMHC says the majority of landlords would not cover their expenses.
'If you take into account, monthly mortgage payments, insurance, taxes, condo fees, the rent that you're asking on the market would not be able to cover those losses,' Cortellino said.
Real estate broker Amy Assaad says there are a number of reasons for that. One of them is the ban on foreign investors.
'The people who were buying these types of properties were investors, and we don't have these investors anymore, and that's what's affecting the market,' Assaad said.
Not to mention oversupply, with a lot of units looking exactly the same.
'You're competing with thousands and thousands of units that are on the market at the same time,' Assaad said.
According to the CMHC, Montreal faces many of the same challenges as Toronto, but the impact is different.
'The volume of condos in Toronto is way higher than Montreal,' Cortellino said. 'I would say there's investors in Montreal for the condo market, but that market is way larger in Toronto.'
For Montreal, it results in a lot of downtown condos sitting on the market.
Assaad says bigger units with more than one bedroom and more than one bathroom that also include parking tend to have higher resale value.
'A condo that was selling ten years ago is selling for less sometimes than what the person paid for it,' Assaad said. 'Whereas a single-family home downtown Montreal has tripled in value.'
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