Montreal real estate sees unusual surge in sales of million-dollar-plus homes

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Montreal’s real estate market defied expectations in the first three months of 2024, recording a “surprising and unusually early rebound” in sales of properties costing at least $1 million.

In the first quarter, 378 residences valued at $1 million or more were sold in and around Montreal, according to a Sotheby’s International Realty Canada report on the luxury housing market, released Wednesday.

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That’s a 53 percent increase compared to the same period last year.

The vast majority of luxury home sales in 2024 (318) were in the $1 million to $2 million range.

“That was obviously a huge, huge area of ​​activity,” Don Kottick, chief executive of the real estate company, said in an interview.

The dramatic increase is in stark contrast to the first quarter of 2023, when Montreal saw a 14 per cent drop in sales of homes over $1 million.

Most 2024 sales involve single-family detached homes, but attached homes and condominiums also increased.

High immigration fueled some of the demand, Kottick said.

So did pent-up demand.

“A lot of people have been sitting on the sidelines, waiting for an indication that (interest) rates are not going to continue rising,” he said.

“I think a lot of people said, ‘OK, rates are expected to go down mid-year,’ and they may have seen this as a window of opportunity before all the buyers come running back.”

Sales remained stable in the market of more than 4 million dollars. Eight homes were sold in this category, the same as in the first quarter of 2023. No “ultra luxury” sales (more than $10 million) were reported, as in the same period last year.

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Kottick said he expects the strong housing market to continue, especially if the Bank of Canada cuts interest rates in the coming months.

“The sweet spot is really in the $1 million to $2 million range,” he said. “I think we’ll see that it’s an area that will continue to be strong in the future.”

In its report, Sotheby’s said: “Despite a steady influx of inventory of properties for sale, the Montreal (region) is projected to grow 2.5 per cent, attracting skilled workers and families in housing need.

“With the region’s economic outlook stable, sales activity in Montreal’s conventional and luxury real estate markets is expected to see steady gains in the coming months.”

Kottick said last week’s federal budget may affect the housing market.

Finance Minister Chrystia Freeland announced changes to the taxation of capital gains, that is, the profit obtained from selling assets.

People with capital gains of more than $250,000 will pay taxes on 67 percent of the gain, up from the current rate of 50 percent. The change takes effect on June 25.

Quebec says it will follow Ottawa’s lead and adjust its capital gains rules to bring them in line with federal ones.

Primary residences will continue to be exempt from capital gains taxes, meaning they can be sold tax-free.

But the new rate will apply to the sale of second homes, rural homes and investment properties, Kottick said.

“In rural areas, in cottage markets, anyone thinking about selling or owning investment properties will pause and think about it,” he said.

“I think this will make people just sit back and wait, perhaps anticipating a change of government and (a) retraction of the changes.”

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