Top 5 Montreal Areas Real Estate Investors Must Pay Attention To

Canada’s “most European city” is experiencing a real estate boom.  Over the last 5 years real estate prices have risen by 5%. With prices still within most’s means, families will continue to reach for home ownership.

For investors and landlords, Montreal is a great investment option with untapped potential.  However, some neighborhoods present better opportunities for growth. In this article, we’ll explore which spots are great for real estate investors to get in on.

What’s Causing Montreal’s Real Estate Growth?

A few factors are heating Montreal’s real estate market.  First, the constant influx of immigrants keeps the rental market thriving.  Second, the city’s positive job market attracts and keeps young professionals.  These workers prefer to live on the Island and within reasonable commuting distance from the work centres, which heats up certain markets.  Finally, Montreal’s vast suburbs continue to be great spots to raise a family.

This trio is reflected in real estate market stats. Centris data shows the amount of units sold was up 11% in the last 4 quarters of 2017.  The condo market was especially hot with an increase in sales of 18% and a median price growth of 4%.

The Future for Montreal Housing Market Is Bright

Montreal’s housing market outlook for the coming years is positive.  According to CMHC predictions, housing construction starts as well as resale market transactions will be on an upward trend.

That said, investors and landlords may be in for a few hiccups.  The CMHC expects slightly lower rental rates due to a rise in the housing supply.  However, there continues to be red hot rental markets that investors can turn to. These are localised and show no signs of slowing down.

Griffintown: Montreal’s Condo Supermarket

What used to be a ghost town filled with cheap industrial rental space and warehousing has transformed into a desirable condo neighborhood.

Located right next to the city’s major work centres (Downtown and the Old Port), the neighborhood attracts the young professional crowd.  Although amenities to satisfy this clientele are under construction, the neighborhood continues to attract homebuyers and renters for one reason: it’s still incredibly affordable.

Consider this: the average Griffintown condo sells for $301,000.  Now compare that to $378,000 in The Plateau or $330,000 in Notre-Dame-De-Grace and that’s a steal, especially for a first time homebuyer.

There’s been talk of market saturation and inventory surplus and it is easy to understand why.  A quick drive-by on highway 720 shows a skyline littered with construction cranes. However, there’s no sign that the neighborhood’s real estate market isn’t slowing down.  According to housing data, the average condo price rose by 9% in Q4 2017 while sales volume increased 14% over 2017.

Meanwhile, the City of Montreal has earmarked $141 million for beautification and infrastructure projects.  Commerce is trickling in with new businesses regularly opening up on Notre Dame and Peel Street. As available land for development rarifies, condo starts will decrease in coming years.  Not to mention that the City of Montreal announced that no new building permits would be issued from here on.

All this will further increase Griffintown’s desirability factor. Real estate investors can bank on the neighborhood continuing to grow over the next 5 years.

1. Rosemont-Petite Patrie: The Plateau’s Little Brother

A more affordable alternative to The Plateau, the area shows promising signs for growth in coming years.  For starters, the borough has amenities that make it a great place to live. These range from green space, schools, commerce and great eateries.  The area attracts young professionals who prefer to be removed from the hustle and bustle of downtown, while still living in a trendy urban environment.

Located against The Plateau, the neighborhood struggled to rise to its potential due to one factor: no access to the work centres by mass transit.  Reaching Downtown or the Old Port could take anywhere from 30 to 45 minutes by bus for residents not within walking distance of a metro station.

All this is going to change over the coming years.  Montreal’s new mayor made a new metro line her signature campaign promise, vouching that by 2025 Montrealers would be served by the 29 station Pink Line.   A 4-year strategic paper published by Quebec’s provincial government called for a new metro line to contribute to the improvement of mobility in the city.

Rosemont-Petite Patrie will be a beneficiary of this metro line receiving a total of 4 stops.  If all goes to plan, the arrival of the Pink Line will cut the commute down to a mere 15 minutes, solving the one variable that has left this market underpriced.

But is there room for growth?  Rent in the area is still incredibly cheap and underpriced for the amenities the neighborhood offers.  A 2 bedroom rents for $740 a month compared to $950 in The Plateau. This gap widens even more for 3 bedrooms which go for $1,020 in Rosemont and $1,385 in The Plateau.  For the investor, this means that there’s room for growth, although it’ll have to wait until the Pink Line is built.

2. Verdun: Plex-Central

For decades, Verdun was a “dry” working-class neighborhood.  It’s main commercial hub, Wellington Street, saw a marked decline when its clients flocked downtown after the arrival of the metro station in 1970s.

This did wonders at keeping real estate prices down, until 2013 when the alcohol sales ban was lifted.  All of a sudden, new bars opening near incredibly cheap rent caused a surge of young urbanites to settle in.  Commerce came back and the clash of that gritty 1960s Montreal with modern culture created a vibrant and trendy atmosphere.

Verdun’s real estate prices have been soaring in the last years, especially since 2016.  The potential for growth is especially high in the “Plex” realm. According to 2017 sales data, 2 or 3-Plex prices have climbed by 20% in the last year.  This is great news for real estate investors since prices are still affordable and investing in this market is still an option. A typical Triplex in Verdun costs between $500,000 and $650,000 while average 1 and 2 bedroom rents go for $800 and $1,000 a month respectively.

3. La Prairie: Untapped Suburban Potential

A safe bet for any real estate investor: La Prairie has been the destination for new home builds for the last 5 years.  New families who can’t afford Candiac’s commanding prices often choose to settle in this suburb. Prices have been climbing at a steady 8% over the last 2 years with no end.  Single-family dwellings dominate this market. But at a median price of $374,000, investors can turn out a healthy cash flow from a rental.

4. Vaudreuil: The Wild Card

While not technically Montreal, this municipality is currently experiencing a real estate boom.  Over the last 12 months, sales volumes have risen 11% while new listings have dropped 9%. Single-family dwellings are incredibly affordable at a median price of $300,000 (which is climbing at 5% a year).

It’s important to note that Vaudreuil is almost at the halfway point between Ottawa and Montreal.  This makes it perfect for families who have one member working in each city (yes, that a thing). One can commute to Ottawa by car while the other gets to Montreal by train.  It’s also perfect for anyone working in the West Island: commuting by car is reasonable since traffic doesn’t start until further up highway 40. Finally, it’s a great place to raise a family: Vaudreuil is a peaceful community next to the water and has all the amenities the South Shore boasts about.  

Investors shouldn’t expect wild fluctuations in prices in Vaudreuil. This is a long-term buy and hold strategy.