Thirteen years after buying her condominium in Notre-Dame-de-Grâce, Ligia Pena is ready to move, but the PhD student, who is self-employed, has concluded she can't afford to.
"As much as I can make a lot of money selling my own condo, because the value has increased significantly in the last couple of years, I just can't afford anything – not only on the island, but off the island, too," Pena said.
The tight market has led Royal LePage to revise its forecast upward to reflect the continued pressure on housing prices. In a survey released Tuesday, the realtor predicted that home prices in the greater Montreal region will rise by 12.5 per cent, to an average of nearly $600,000 in the last quarter of 2022, compared to the same quarter last year.
"Our extremely hot sellers' market and our low inventory situation continues and is anticipated to continue right through this year," said Sean Broady, a real estate broker with Royal LePage in Beaconsfield.
"I think they were anticipating a little bit more inventory to hit the market, and that just hasn't happened."
"There's a lot of buyers," agreed Martin Desjardins, a real estate broker for the Montreal-based real estate agency, Keller Williams.
"We're seeing that imbalance between the inventory and the supply — and still the thirst from buyers."
Catch-22 for would-be buyers
Many of Desjardins's clients are like Pena: they're ready to sell their homes but are choosing not to since they've become priced out of the market, he said.
"People aren't selling their houses because they can't find something. That's one of those Catch-22s."
The average cost of a home in the greater Montreal area rose by 18.5 per cent in the first quarter of 2022, according to the Royal LePage survey — climbing from an average of $482,250 to $571,400.
For single-family detached houses, the increase was 19.8 per cent — rising from an average of $531,000 at this time last year to $636,200. For condominiums, the increase was 17.7 per cent, from an average of $379,500 to $446,700.
Prices rising fastest in suburbs
The price of homes is increasing at an even faster rate in Montreal's suburbs, said Royal LePage, as it has for the past six consecutive quarters.
While Montreal was once the epicentre of Quebec's housing market, the popularity of remote work over the last two years has transformed the market, with more people now flocking to suburban areas, Broady said.
"For young buyers who are trying to get into the market, the drive out of the city can be 45 minutes-plus to get into their first home," he said, "or they have to buy a little condo to compromise just to get in the market, build some equity and then move up."
The highest increase in home prices on Montreal island was in the east end, Royal Lepage reported, where the average cost of a single-family detached home jumped by 25.8 per cent — going from $488,000 to $613,800.
In the city centre, the average cost increased by 11.7 per cent year-over-year, to $692,500 in the first quarter of 2022. A single-family home was up 14.3 per cent, to $1,062,800, while the average cost of a condominium was up 10.7 per cent, to $530,900.
Bank rate change has little effect
Nationally, the average home increased in value by about 25 per cent to $856,900, according to the survey.
It's the highest gain in average home prices since the company began tracking the prices of homes, Royal LePage said.
In its latest move to rein in high inflation, the Bank of Canada hiked its benchmark interest rate by half a percentage point to one per cent last week.
Broady said the interest rate increase has yet to have an impact on home prices.
"It hasn't had any effect whatsoever," he said. "I think even given the one per cent increase and the fact that rates have gone up, there isn't enough there to significantly cool the market."
Meanwhile, Pena said she simply feels stuck. And she hopes the government will do more to help those who do not own a home get a foot in the door.
"I hope other measures are taken into consideration to help cool down the market and entice people to sell," said Pena, "but also make it more affordable for people of all income brackets to access affordable housing."