Tim Zyto, Owner of Montauk Sofa, located on a trendy strip of Saint-Laurent Blvd south of Prince Arthur St. in Montreal, noticed that sales were up just few months into the COVID-19 pandemic.
“In 2020, things started getting busy. Midway through 2020, things started to get busier,” he said. “COVID hit and people were shocked but then they started to adjust, and people have more disposable cash they’re not putting towards travel, so they’re putting it towards a new house, or furniture, or pools or landscaping.”
Zyto, who began his minimalist sofa brand in 1995 that has since opened locations across North America, added that he hasn’t been this busy in years.
Unsurprisingly, that coincides with real estate activity in the Québecois metropolis catching fire. Although the Montreal real estate market began taking off around five years ago as it reported its lowest unemployment figures in decades, activity has reached a fever pitch during the COVID-19 pandemic, and not even the province’s two curfews have stopped people from buying homes.
“COVID has been good for furniture companies,” said Martin Rouleau, a broker with Engel & Völkers. “People spend more time at home and they’re investing in their houses. Contractors are also renovating their homes, their kitchens, their bathrooms, fireplaces, so it’s all about the comfort of their homes. As people spend more time in their houses, they are realizing their properties don’t fit their needs. COVID has been good for real estate because people aren’t spending money on travel, they’re not spending money on clothes or restaurants, so they’re investing in their homes.”
Demand in the Montreal real estate market is strongest for single-family homes, of which sales declined by 12% in 2021 to 26,529 from 30,129 a year earlier, according to figures from the Quebec Professional Association of Real Estate Brokers. However, that appears to be a function of fewer listings, which decreased by 39% to 3,861 from 6,289 during the same period, causing prices to surge by 24%, to $495,000 from $400,000.
“Some pockets of Montreal are doing better than others. Obviously, sales for houses on the outskirts of the city in the suburbs are performing very, very well,” Rouleau said. “Downtown condos are still performing well, but not as well as single-family homes on the outskirts. More and more, people are working from home, so they’re willing to work outside the downtown core and they telecommute. The market is on fire.”
However, selling a fixer upper, irrespective of how in-demand detached homes are in Greater Montreal, is difficult because of persistent backlogs on the home renovation market. Moreover, a confluence of supply chain issues, which have resulted in inflationary prices, and demand far in excess of contractors’ abilities to accept more work has put upward pressure on prices.
“It’s really expensive to do renovations during COVID, so people are looking for houses that are turnkey,” Rouleau said. “Houses that are gut jobs may be less expensive during this period of COVID, where the cost of material is high and finding workers is extremely difficult, but some buyers underestimate the cost of renovations until they do the actual work these days. In a perfect, perfect world, they’re buying houses where all the major components are in good working order and they only have a little bit of cosmetic work to do. For example, I have to do the roof on my house and it’s impossible to get someone to get me a quote.”
Rouleau says locals are propelling housing demand in Montreal, and that there are fewer out-of-towners and buyers from China, the latter of whom have taken a liking to Montreal in recent years following the implementation of foreign buyer taxes in Vancouver and Toronto, than there were pre-pandemic. There could also be nary a doubt that rock-bottom interest rates are playing an outsized role.
But prices can only rise so high before they begin decelerating. Rouleau anticipates prices will rise again in 2022, albeit not as much as they did to close out 2021.
“We’re going to hit record prices again this year, for sure, because there’s no sign of slowing down -- absolutely not,” he said. “The increases won’t be as great in 2022, though, but we will still see increases.”