The Housing Crisis in Montreal is here..

Montreal is in the middle of a housing crisis, one of the worst it has faced in a long time. With the underlying risk of recession, increasing inflation, and a surge in interest rates to combat inflation, the economic growth of the country has slowed down. The failure of the government to resolve these issues is negatively impacting the purchasing power as the majority of the public are unable to manage the finances and are struggling to pay rent.

Claude Pinard, president and executive director of Centraide of Greater Montreal while talking to Global News revealed that almost one in five homes are unable to make ends meet because of the inflation that has been increasing constantly during the past few months. Unfortunately, the city is currently facing a daunting housing crisis. This has left many people leaving their homes and struggling to find affordable condos for rent that will meet their needs.  

Consequently, this has led to an unprecedented situation for Montreal home sellers. Currently, demand for housing outweighs supply, and housing prices are on the rise driving away potential home buyers and renters. The hands of home sellers are tied and are at a loss for what to do. 

This inflation results in the difficulty of affording rent in Montreal as people are unable to catch up to inflation. Furthermore, it has also resulted in the declining buying and selling ratio of homes in Montreal.

Reasons for the Housing Crisis Happening in Montreal

The Montreal housing crisis happened due to several economic issues that happened over the decades. According to CTV News, the Federal Tax Incentives that spurred purpose-built rental constructions were rolled back decades ago. This includes fiscal policies by the Canadian government and other laws set in place that exacerbated the already fragile housing situation in Montreal and Canada at large. 

According to CMHC, the housing crisis has escalated due to higher demand for rental housing coupled with an inadequate supply which can be attributed to three key factors:

Increasing Inflation and Interest Rates

The surge in interest rates by the Bank of Canada  to combat inflation has spiked the prices of goods and services worldwide. The increasing interest rate has also pushed Canada to rapidly increase prices to stabilize the economy. 

The inflation rate in Canada has been rising rapidly in the last few years. Currently, the annual inflation rate rose to 3.3% in July 2024, from 2.8% in June. This increase is above the market expectation of 3%. Moreover, the Bank of Canada (BoC) raised its interest rate to 5% on July 12, the highest level in 22 years. This is a dire situation for the average Montrealers looking for affordable housing. 

Increase in Immigration Rate

The increase in the immigration rate is one of the reasons households in Montreal are suffering from a housing crisis. The high growth of immigrants has resulted in the unavailability of housing and rental units in Montreal.

Immigration 

The Liberal Party of Canada led by Justin Trudeau is facing criticism as the government is welcoming new immigrants despite the economic downfall, inflation, and increasing housing crisis.

In 2022, Canada accepted more than 800,000 international students, one of the highest it has recorded in the last five years. Besides, the federal government has made a promise to accept 1.5 million new immigrants by the year 2025.  However, the question of housing the newcomers in the high-time housing and affordability crisis is still unanswered.

General Migration 

Besides international immigration, people from other cities in Canada are also migrating to Montreal. One contributing factor to this increased migration rate in Montreal is the city’s comparatively lower cost of living compared to other major Canadian cities. The great public transportation offered in Montreal is another reason for migration

Citizens can worry about spending less on transportation and rely on the STM or the new REM.  A reason that attracts migration due to the budget saving on transportation, however, which leads to more population growth in Montreal. 

Increasing Population

Canada’s lax immigration laws have led to its population growing yet with few affordable homes available for Canadians. To understand what Canada is facing below are some key breakdowns of the situation. 

• BMO published an analysis in May suggesting that for every 1% population growth, housing prices rise by 3%.
• The TD  report released on July 26, showed that Canada’s population boomed by 1.2 million people over the last 12 months, and
• Canadian Prime Minister, Justin Trudeau asserts that housing is not primarily a Federal Responsibility, rather it’s that of the province and their governments. He urges them to do more. 

Cost of Living

Montreal to many is the ideal location for students and other individuals needing affordable homes. However, that’s no longer the case as the cost of living in Montreal is estimated to be 1,295.9$ without rent, for a single person. For a family of four, this rises to 4,766.7$ without rent. On a better note, even with the higher cost of living, Montreal is still lower compared to other big Canadian cities like Toronto and Vancouver in terms of cost of living metrics. 

Rising Construction Costs

Building new affordable housing units gets harder each day as the cost of construction materials rises and skilled laborers diminish. According to a report by the Royal Bank of Canada (RBC), the housing shortage can be attributed to higher residential construction prices. The price index has increased by 51% since the start of the pandemic in 2020.

Furthermore, Jean-Pierre Racette, the Director General of the Société d’habitation populaire de l’Est de Montréal (SHAPEM) concurs that construction costs have increased rapidly, thereby disrupting the labor market and supply chains. This has led to rental prices increasing by 44% in the last decade, according to a report by The Chamber of Commerce of Metropolitan Montreal.

Rental rates and housing costs are increasing due to high demand and insufficient supply of available housing units. The impact of recent inflation has caused construction companies to slow down construction due to increasing construction costs and interest rates.

Take for example the new REM previously mentioned as an attractive reason to move to Montreal, it cost $10 billion. However, the project has been expanded on with new stations being added and construction issues coming up. It is now estimated that it will cost at least $30 billion to complete successfully. 

Impact of Housing Crises on Montreal Renters, Sellers and Buyers

As Global News reports, Centraide Montreal is issuing a warning that the city’s housing crisis has gotten to astounding levels, with hundreds of thousands of people not making ends meet. The housing crisis in Montreal is exacerbating the homelessness in Montreal issue in the city. 

The pressing issue for both residents, old tenants, and new residents is seeking budget-friendly housing options. However, shortage of house listings, and an increasing demand for housing units, rental and real estate prices are skyrocketing. The housing market can’t keep up with this. The largest shareholders in the housing sector; Montreal home renters, buyers, and sellers are struggling due to the unstable market situation. 

Impact on Montreal Renters

In a recent press release, Centraide Montreal revealed that “After paying the cost of rent, the families are already starting their month in red”. The combined yearly shortfall for these households is projected to reach $3.6 billion. This indicates that their collective expenses exceed their total income by $3.6 billion annually.

As the rents are skyrocketing, exclusive rental units are costing more than the ones already occupied. Housing Advocacy RCLAQ reported that the average rent prices in Montreal surged by 14% between 2022 and 2023. In June, Montreal reached a new yearly peak, with the average cost of renting an unfurnished one-bedroom unit now standing at $1,717 according to Liv.rent data. Compared to the previous year, the average cost was $1400.

As reported by CBC News, as of July 1st, over 300 Montreal renters and households might lose their homes. Montreal home renters are now forced to wait longer for affordable houses to be posted. The competition for rentals is fierce leading to hiking prices of houses. Worst of all, housing insecurity is rising among current residents as landlords may not renew their leases and drastically increase rent. 

The Chamber of Commerce of Metropolitan Montreal released a study this month saying the region would need to add 23,100 dwellings per year until 2041 for the local housing market to return to balance — considerably more than the 13,900 that are expected to be built annually.

Impact on Montreal Sellers:

Home sellers have been impacted by the current housing crisis due to surging mortgage rates. The real challenge sellers are facing is finding potential buyers who are willing to shell out in times of crisis. Home sales are up 1% year-over-year, indicating a slow rise in the markets. Although it’s true they get to make a profit from the hiked prices, the sustainability of the market is at risk. They get into fierce competition with each other for the limited pool of buyers and renters willing to get homes. There’s an upside to this as they make quick sales and rent to desperate customers looking for condos for rent.

Francis Cortellino, Economist at CMCH said while talking to Global News that if you are planning to sell your home this year, you can expect things to move slower. He also added that the increase in mortgage rate has made it quite impossible to access homeownership right now.

Impact on Montreal Buyers:

The condition doesn’t improve much for home buyers. With the lack of housing available and the increase in the mortgage rates, families are not planning to buy homes anytime soon. The steep price of houses leads to increased competition among buyers for the few available homes or condos for sale. Taking into the fact that the average home sale price has a 3.8% annual increase, home buyers have to take on larger mortgages which puts a huge financial strain on them.

What is Being Done About The Housing Crisis in Montreal

Benoit Dorais, Vice-Chair of Montreal’s Executive Committee acknowledged in a public address back in June about the housing crisis that, “affordability in Montreal is under threat.”

Effectively, Dorais sees the severity of this issue and recognizes that it affects everyone. Affordable housing is scarce. He claims there are initiatives in place to support Montrealers during this difficult time. For the moment, social housing and shelter camps are his priority to get homeless people off the streets. He plans this will help them transition back into family unit homes.

For the average Canadian, the government passed the National Housing Strategy Act (NHSA), recognizing housing as a human right. It ensures access to adequate, suitable, and affordable housing for all Canadians. Steve Pomeroy, Canada’s Housing expert states the government has funded additional affordable units over the last decade. Unsurprisingly, this effort creates one affordable unit for every ten affordable units that are lost. 

This is not enough and larger associations in Quebec such as Regroupement des Comités logement et associations de locataires du Québec (RCLALQ) and Corporation des Proprietaires Immobiliers du Québec (CORPIQ), an organization of landowners are calling on the Housing Minister, France-Élaine Duranceau to act immediately. They are both outspoken groups that have different and contradictory solutions to this situation. Nonetheless, they agree the government must do something before the housing sector fails. 

How Samcon is Combating the Housing Crisis in Montreal

To address the affordability issue plaguing Montreal, we stopped the development of any for-sale projects, mostly focusing on for-rent projects. Realizing the demand for affordable housing was an urgent necessity for Montrealers, anyone looking for a condo to rent at the moment will be impressed by the solution offered by CEO Sam Scalia and team.  

Currently, we have project La Jeunesse available for rent for Montreals.  As well as Terrace Boyer which recently finished construction as of this year.  A brand new building for a first time rental.

Additionally, we are also hard at work with building Des Ormeaux. , another rental building in the beautiful neighbourhood of Tétreaultville.

Effectively, we are in the process of discussing with the city for zoning rights for the construction of a tower on Rue Stanley, downtown Montreal. Originally planned to be for sale, Samcon has completely pivoted 180 degrees to push the initiative to secure Montrealer’s more affordable rental housing.  

We are an organization with a long history and experience in the construction industry. Since 1991, we’ve completed over 90 projects that have sparked a revival of several Montreal neighbourhoods. 

With over 5,000 condos sold by Samcon, we are the housing organization to trust if you need a condo for rent right now. 

We in our own way are seeking to alleviate the issue of housing scarcity in Montreal by making beautiful apartments available to anyone. 

Samcon’s Current Available Rental Units:

Amid the housing crisis faced by households in Montreal, Samcon has announced the rental units available in the following locations of Montreal.

Terrasse Boyer

Terrasse Boyer located near the Vallery neighbourhood is a modern rental project. Vallery is well known for its natural and cultural heritage. With a distinguished restaurant and peaceful environment, Terrasse Boyer is an ideal location to rent your home.

Place Lajeunesse

Place Lajeunesse is the new “Novo Climate” rental project that was completed in 2018 and is now ready to accommodate the renters. It is located in the beautiful neighborhood of Ahuntsic, near Promenade Fleury.

Promenade Des Ormeaux

Promenade Des Ormeaux, is an elegantly designed residence situated near Thomas Chapais Wooded Park. It is a project of Samcon that is currently under construction and soon will be available for tenants. Although still in construction you can get on the waitlist! 

For any any rental inquiries please contact Karen Ohana at 438 230-1134

Housing Crisis Conclusion

Amidst the ongoing housing crisis faced by Montrealers, Samcon is diligently putting forth every effort to combat the impending economic challenges.  The trend shows an imminent recession within the next 6-8 months.

If this trend continues, housing insecurity and inequality will increase exponentially and cause untold damage to the welfare of Canadians at large.   Despite all this, we at Samcon are doing our best to combat this crisis aggressively with affordable housing in this competitive market. Especially with our for-rent projects that will serve as a housing of hope for Montrealers seeking comfortable and affordable homes amid the housing crisis. 

Samcon remains committed to guiding the community through these trying times with strong and compassionate leadership.