Quebec’s Real Estate Market Set for a Return to Stability in 2024: An In-Depth Outlook

After several years of unprecedented volatility marked by pandemic-induced surges and sharp interest rate adjustments, the Quebec real estate market is poised for a significant shift towards normalcy in 2024. This optimistic forecast, shared by the Quebec Professional Association of Real Estate Brokers (QPAREB), predicts a landscape characterized by stable prices, transaction volumes aligning with historical averages, and an overall reduction in market surprises. For realtors and prospective homeowners alike, this heralds a welcome period of predictability and more considered decision-making.

Stéphanie Lapierre, QPAREB’s chief economist, emphasizes that this anticipated stability will grant both buyers and sellers a crucial advantage: more time. The frantic pace that defined recent years, often leading to rushed decisions and bidding wars, is expected to subside. “We’re no longer in a race, even if there’s still a bit of overasking,” Lapierre notes, highlighting a shift towards a market where careful preparation and thoughtful negotiation will once again take precedence. This environment is inherently “favourable for a realtor,” allowing for more strategic guidance and successful outcomes for their clients across the province of Quebec.

Projected Transaction Trends: A Modest Dip Followed by Resurgence

QPAREB’s comprehensive 2023 year-in-review and 2024 Quebec real estate market outlook, released on December 14th, forms the basis of these projections. The association forecasts a slight 2% dip in province-wide transactions for 2024, reaching approximately 74,719, down from an estimated 76,036 in 2023. While this represents a marginal decrease, Lapierre points out that this figure remains remarkably close to Quebec’s historical average of 78,000 transactions over the past two decades. This positioning suggests that 2024 will still represent a “good year for the Quebec real estate market,” albeit one that differs significantly from the extraordinary peaks seen during the pandemic.

For context, the year 2020 saw over 112,000 transactions, an anomaly fueled by low interest rates and a shift in housing preferences. However, 2022 brought a stark correction, with sales plummeting by 20% as the Bank of Canada aggressively raised interest rates to combat inflation. The lingering effects of these elevated borrowing costs are expected to influence the initial months of 2024. Lapierre anticipates that sales will “remain weak at the start of the year” due to sustained high interest rates. Nevertheless, a gradual rebound in activity is foreseen later in the year, partly driven by persistently low inventory levels that continue to exert upward pressure on demand. Additional macroeconomic factors, such as a projected increase in the unemployment rate from 4.3% to 5.3% and a broader economic slowdown, are also expected to temper market activity in the early part of the year.

Shifting Dynamics: Enhanced Buyer Negotiation Power, Albeit Short-Lived

One of the more noteworthy developments anticipated for the early stages of 2024 is an increase in new listings. Coupled with a modest cooling in sales activity, this rise in available properties is expected to foster more balanced market conditions, temporarily empowering buyers. This shift will provide prospective purchasers with a greater opportunity to negotiate more favorable terms, a luxury largely unavailable during the fiercely competitive periods of recent years. The ability to conduct more thorough due diligence, negotiate on price, and include conditions will undoubtedly make the home-buying process less stressful and more equitable for many.

However, QPAREB cautions that this window of heightened buyer leverage will likely be brief. The prevailing sentiment among economists, and reflected in QPAREB’s projections, is that the Bank of Canada will initiate interest rate cuts later in 2024. These highly anticipated announcements are expected to act as a significant catalyst, stimulating renewed demand and potentially triggering a market upturn. Furthermore, sustained immigration levels into Quebec are poised to contribute significantly to housing demand, further shortening the duration of any buyer-centric market. QPAREB forecasts a 75-basis-point drop from the central bank in 2024, though Lapierre acknowledges that “some economists are going further,” suggesting the possibility of even more substantial rate reductions that could accelerate market recovery. This impending shift underscores the importance of strategic timing for both buyers looking to capitalize on early-year conditions and sellers preparing for a potentially more active second half of the year.

Price Stability Across Quebec, with Regional Nuances in Montreal and Quebec City

At a provincial level, the Quebec housing market forecast indicates general stability for median prices of single-family homes throughout 2024. This widespread equilibrium is a testament to the market’s anticipated return to normalcy, offering a predictable environment for many regions. However, this overarching stability masks distinct regional variations, particularly within Quebec’s major metropolitan areas.

In Montreal, the province’s largest metropolitan area, a modest but discernible increase in median prices is expected. Single-family homes in the Montreal real estate market are projected to see a 2% rise, reaching approximately $549,400. Condominiums are also forecast to experience a 1% increase, with their median price settling around $395,600. Transaction volumes in the Montreal area are expected to continue their downward trend slightly, dropping to 35,230 in 2024, a 3% decline from the estimated 36,285 transactions in 2023, which itself was 15% lower than in 2022. This suggests a gradual adjustment in Montreal, balancing affordability concerns with consistent demand.

In stark contrast, Quebec City’s housing trends are predicted to buck the provincial trend, with the capital poised to outperform other regions. Stéphanie Lapierre attributes this divergence primarily to a persistent lack of availability for single-family homes. As a result, Quebec City is expected to witness a robust 5% increase in single-family home prices, pushing the median to approximately $368,000. Condominiums in Quebec City will also experience growth, albeit more modestly, with a 1% increase bringing their median price to around $244,900. This highlights the impact of supply constraints, particularly in desirable urban centers. It’s also worth noting that in 2023, regions with median prices below the provincial average often reached new peaks, while higher-priced areas experienced slight declines, illustrating a recalibration of value across different segments of the Quebec property market.

Unpacking Overbidding: A Persistent Feature in Select Markets

The phenomenon of overbidding, where properties sell for more than their asking price, has been a defining characteristic of the recent seller’s market. QPAREB reports a significant decline in the prevalence of overasking bids across Quebec from January to November of the current year. The share of single-family homes selling above asking price fell to 11%, a substantial 22% drop from the previous year. This broad provincial trend further supports the narrative of a market returning to more balanced conditions, reducing the intensity of competition among buyers.

However, Quebec City remains a notable exception to this provincial trend. Lapierre points out that the provincial capital is one of the few areas where overbidding remains common, with one out of every four transactions in the preceding month seeing properties sell above their initial asking price. This enduring trend in Quebec City is directly linked to robust demand for single-family homes coupled with critically low availability. Interestingly, Lapierre also observes that “it’s much more common for houses to sell for over asking price in regions of the province where prices are more affordable than in Montreal.” This suggests that even as the overall market cools, pockets of high demand and limited supply in more accessible price brackets can still ignite bidding wars.

Even in Montreal, despite the general slowdown, quality properties that are well-maintained, do not require significant renovations, and are priced appropriately can still attract multiple offers and lead to overbidding. This underscores that even in a more balanced market, premium properties will always command strong interest. On a more positive note for the broader market, QPAREB highlights a healthy return to more traditional negotiation processes. In October of this year, for instance, 70% of houses sold in Quebec went for their asking price, 23% sold for under-asking, and only 7% commanded over-asking bids. This demonstrates a significant shift away from the seller-dominated market of previous years towards a more equitable and predictable negotiation landscape.

Quebec’s Strong Foundation: Resilience and Low Household Debt

In conclusion, the Quebec residential real estate market is strategically positioned for more balanced and predictable conditions in 2024. This optimistic outlook is underpinned by several key factors that contribute to the province’s inherent resilience. Quebec boasts a relatively low household debt burden compared to other Canadian provinces, providing a stronger financial foundation for its residents. This financial stability translates into a market that is less susceptible to extreme fluctuations and more capable of absorbing economic shifts.

The combination of anticipated interest rate stabilization, a gradual increase in inventory, and sustained demographic growth ensures that demand will remain robust without necessarily leading to uncontrolled price escalation. For buyers, 2024 presents an opportunity to enter a more measured market where careful planning and negotiation can lead to successful homeownership. For sellers, it means a return to realistic pricing strategies and a market that values quality and thoughtful presentation. As Stéphanie Lapierre aptly summarizes, Quebec’s market is entering a phase where the frantic pace of the past is replaced by a more sustainable and balanced rhythm, benefiting all participants in the real estate ecosystem.