The city of Montreal in Canada is probably one of the most diverse and unique cities in Canada. The predominantly French-speaking metropolitan area is an economic, cultural and financial powerhouse, and is a major transport and cargo hub as well.
The city, according to real estate analysts, appeared to be in better condition the housing front than other major Canadian cities in as early as 2000. At the time, the vacancy rate was around 3%, as compared to 0.7% in Ottawa, and 0.9% in Toronto and Saskatoon as well. Moreover, the average monthly rent for a two-bedroom apartment was $506, compared to $916 in Toronto, $864 in Vancouver and $739 in Calgary.
However, according to some housing observers, one in ten Montreal tenants needed to spend more than 80 per cent of their income on housing; and according to a previous census, nearly 50,000 households found themselves in this shaky condition.
The Entry Of Newer Immigrants Spells More Need For Multi-family Housing
One of most recent developments in the city’s residential market that is quite curious, is the higher than average increase of housing starts for multi-family properties.
Thus from 2001, the rise in the number of single-detached homes was 4.0 percent while for the urban multiple starts the jump was of 39.4 percent. The main reason for this movement, is the immigration of an estimated 10,000 new households, which arrive each year on the market in Montreal, and since for next few years these new settlers do not yet have approval for credit to buy a house, so they have to rent, which explains why the market needs more residential properties for renting.
After getting approved for credit, most of them will prefer to live in mixed ethnic communities where they can share their cultural traditions and mingle more freely. This fact pushes these new entrants to choose less – expensive multi-family properties in the urban centers, and this is reflected by the recent changes on the market.
What Factors Explain The Rise In Construction Of New Homes
The booming labor market, low inventories of new and existing homes and low vacancy rates on residential rental units are some of the major factors which will help explain the sudden increase in new construction of single and multi-family properties in the French-speaking province of Quebec, as well as in its largest metro area Montreal.
The actual new construction boom can be seen in the frequently-changed forecasts made by Canada Mortgage and Housing Corporation (CMHC). For example, in May 2001 the agency predicted that the new housing starts in Quebec in 2001 will reach 26,200 units, as against 24,695 in 2000.it also predicted new housing starts of 26,500 in 2002.
The CMHC further adds that the current housing market can’t get any hotter, and it will still continue to stay thriving despite the recent slump in the US real estate industry. The CMHC further notes that in the coming months, the market should see increases in supply, and probably more choices.
It sees that housing transactions will probably go down a bit and prices should continue to increase, but not drastically. Despite this quite cautious scenario, the CMHC says that a rise in immigration to Quebec and continuing demand for condominiums will keep the overall housing market a competitive one.
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