CONDOS, CONDOS EVERYWHERE
Are there too many in Montreal? It depends on who you ask
It seems like a person can’t throw a rock in downtown Montreal without hitting a new condo project promising state-of-the-art facilities, a rooftop pool, breathtaking views and a communal lounge.
The question is: are there too many condos in Montreal? Anecdotally, the answer is yes. “There are definitely too many condos,” says Doug Hollingworth, a homeowner who recently swapped his Mile End condo for a semidetached in N.D.G. “I know more people who are leaving (Montreal) than moving here.”
But if you ask a market analyst, the answer is more complicated.
Yes, there is a slight oversupply of condos in Montreal, says Paul Cardinal, market-analysis manager at the Quebec Federation Of Real Estate Boards. He attributes some of the oversupply to the 2012 change in mortgage rules that saw the maximum amortization period drop from 30 to 25 years, an event that, he says, slowed down buying.
However, according to the Q3 real estate data released in September, condo sales are up by about eight per cent in the Montreal region, listings are down and selling time remained stable at 121 days. Cardinal also points out that the number of condos so far this year is down by eight per cent from this time last year, and the new-condo vacancy rate is also down.
“The oversupply we have right now on the resale market is starting to reabsorb, and we’re getting a bit closer to a balanced market,” he says.
ENTER: POPULATION STATS
It would be well and good to let the real-estate data speak for itself, but it doesn’t fully answer the question of whether there are too many condos. For that, we also need to look at population trends and diversity of housing.
First, the statistics. For the first time ever recorded in Canada, the 2011 census revealed that there were more people living alone across the country than couples living with children. At 32.6 per cent, the Greater Montreal area unsurprisingly had one of the higher proportions of single-person households, many of which happen to be occupied by senior citizens.
This, compounded by a rapidly aging baby-boomer population, a stagnant population growth rate in the 18-64 demographic and a provincial birthrate that has dropped for six years in a row, could be interpreted as evidence that more people will need one- or two-bedroom condos in the future than ever before.
However, as two local families discovered, raising a couple of kids in a condo is not an ideal scenario.
After Ed Chan, 33, and his wife conceived their second child, they knew it was time to get out of their 800-square-foot, one-bedroom condo in the Gay Village.
They’d bought it on spec in 2010, and were easily wooed by the amenities, namely a gym and a rooftop pool and lounge.
But by 2015, Chan says, “I just wanted to get rid of it.”
Between the party vibe of the neighbourhood, the homeless shelter across the street and the lack of schools and services, he’d had enough. He put his condo up on the market in 2015 and sold it within four or five months for just $6,000 more than what he’d bought it for.
“I thought it was pretty good, considering a couple people I knew listed for a year and didn’t have any movement on it,” Chan says.
His family packed up and moved into a lower-duplex rental in N.D.G.
Hollingworth, his wife and their two kids also moved to N.D.G., buying a semi-detached home with a driveway, garage and front and back yards.
He’d been sad to leave his Mile End condo, the second floor of a 1920s triplex that had just the right mix of modern conveniences and old charm. But the family of four were tripping over each other, and Hollingworth longed for his kids to have a backyard and basement. He and his wife put their condo on the market in 2015 and got a lot of interest — but no bites.
After languishing on the listings board for a few months, they took their condo off the market and made some basic repairs. When they reposted in February of this year, they had much better success. Their condo was sold in late spring at a profit.
If anything, Hollingworth’s experience is anecdotal proof of local housing market trends: People in 2015 were more cautious about buying, but 2016 so far has seen a jump in condo sales.
LACK OF HOUSING DIVERSITY
That said, Quebec is the province with the lowest rate of home ownership in Canada, according to the 2011 National Household Survey. In Montreal, there are almost as many renters as owners.
Outside the scope of foreign investment — 4.9 per cent of downtown Montreal condos are foreignowned — local people are in fact buying condos. They just don’t necessarily want to live in them.
Nearly 29 per cent of Montreal’s tenants live in rental condos. Additionally, Montreal vacancy rates for smaller homes — many of which are condos — tend to be higher than for bigger ones.
What this all means is, Montreal is a city of renters, and these renters typically like big apartments if they can get them. As well, stricter mortgage-lending rules put home ownership outside the realm of possibility for a lot of people in Quebec, where wages are lower and income taxes are higher than most other places in the country.
But a quick survey of the land indicates that there are far more condo projects than non-condo housing projects in Montreal. Are all these condos condemning us to live out our days in lonely silos, stacked up on top of each other? If trends are any indication, condos are not meant to be a long-term housing solution.
For people who can afford to buy in their younger years, condos are often seen as stepping-stones — a first-time investment to build credit, live independently and, in some cases, save money before upgrading to a bigger property.
And it’s not a leap to conclude that, by the time many people can afford to buy a home, they may be older, have better jobs and perhaps a kid or two, and may be better prepared to opt for a house and leave the city life behind. These people, says Quebec Order of Architects president Nathalie Dion, often move out of Montreal.
“People are leaving downtown because the housing isn’t adequate for families,” Dion says.
Dion points to Griffintown. The area is now a landscape of condo projects, but there are hardly enough schools, day-care services, parks and shops to serve all those new residents.
And so for Dion, the question isn’t whether there are too many condos in Montreal, but whether there’s enough non-condo dwellings to live in.
“Honestly, we’re not sure there is,” she says. Montreal’s social housing buildings are old and need renovating and enlarging, and there’s not enough housing to accommodate people with mobility problems or disabilities.
Earlier consultations between promoters, local government, potential buyers and existing residents should happen earlier in the process to make sure new housing responds to the needs of those who will live in it, Dion continues.
“You cannot leave these decisions to promoters,” she says.
New mortgage rules leave a question mark
SO, WHAT’S THE VERDICT?
“The outlook is still good for condos. It’s affordable for first-time buyers. The very long-term trend is that households are getting smaller and smaller; more people are living alone or are couples without children. For condominiums, you usually have the clientele for firsttime buyers,” says Cardinal of the Quebec Federation Of Real Estate Boards.
There’s one but, though, and it could destabilize Montreal’s fragile equilibrium. On Oct. 17 of this year, a new rule came into effect that requires all new mortgage seekers to undergo a “stress test” — a process that checks to see if a loan recipient could repay their mortgage if interest rates were to increase.
David L’Heureux, Montreal market analyst with the Canadian Mortgage and Housing Corporation, says the stress test could result in some people qualifying only for a smaller mortgage, or not qualifying at all.
“The government wants to protect borrowers from themselves,” he says.
Current market and borrowing conditions may make for a good opportunity to re-evaluate how the housing needs of one of Canada’s oldest cities have evolved over time — and how we can best prepare for future generations.