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Montreal's 18% Inventory Surge in August Creates Buyer Leverage Despite Rising Prices
Montreal's 18% Inventory Surge in August Creates Buyer Leverage Despite Rising Prices
Active listings in the Montreal Census Metropolitan Area jumped 18% in August compared to the same month last year, the first time inventory has grown this fast since the city's post-pandemic price run started. Sales fell 13% over the same period.
That combination, more homes available, fewer being bought, should signal a correction. It hasn't. The median price across most property categories continues to climb, though the pace is slower than the 2020-2022 surge. Sellers are holding firm. Buyers are waiting.
Why more inventory hasn't broken the price floor
The August numbers show a market where neither side is willing to compromise. Sellers who watched their neighbours' homes appreciate 40% between 2020 and 2024 have anchored their expectations to those gains. Many are still listing at prices that reflect what comparable properties sold for six months ago, not what buyers are willing to pay today.
Buyers, meanwhile, face the arithmetic that hasn't budged much: with the Bank of Canada's policy rate at 2.25%, the stress test still requires qualification at a rate roughly two percentage points higher. A household earning $120,000 can qualify for about $535,000 in mortgage financing under current rules. The median single-family home on the Island of Montreal now sits well above $600,000 in most central neighbourhoods. The 18% inventory increase gives those buyers more homes to choose from, but their borrowing power has not changed materially. A household earning $120,000 still qualifies for about $535,000.
Sales volume dropped by double digits, but prices didn't follow because the homes changing hands are concentrated in segments where buyers still have access to credit, either higher-income households, repeat buyers with equity from a previous sale, or investors with cash reserves.
The stale listing problem no one is naming
Not all inventory is equal. The 18% surge includes homes that have been relisted multiple times, properties priced 10-15% above recent comparables, and units in buildings where condo fees have risen faster than wages. Walk through listings in Laval or the North Shore suburbs and you'll find the same dozen properties appearing in search results week after week, each time with a small cosmetic update to the photos or description but no movement on price.
Quebec's land transfer tax, the Welcome Tax, takes roughly $9,400 from a buyer purchasing a $650,000 home in Montreal on closing. That's capital the buyer cannot deploy as a down payment, and it makes the decision to move more expensive than in other provinces. When inventory rises but prices stay high, that tax becomes a reason to wait rather than settle.
What happens when sellers lose patience
More homes on the market now points forward, not backward. Markets don't correct immediately when supply outpaces demand. Sellers wait. They relist. They take the home off the market and try again in spring. But after six to twelve months of carrying costs, mortgage payments, property taxes, maintenance, without a sale, expectations start to shift.
Montreal is three months into this pattern. If inventory continues to climb through fall and winter, the sellers who need to move, job relocations, estate sales, investors holding cash-flow negative properties after stricter short-term rental rules took effect, will be the first to drop their ask. That's when the 18% becomes meaningful.
Until then, the disconnect persists. Buyers have more choice than they've had in years. Prices keep edging higher. And both sides are waiting for the other to blink first.
Montreal's 18% Inventory Surge in August Creates Buyer Leverage Despite Rising Prices
Active listings in the Montreal Census Metropolitan Area jumped 18% in August compared to the same month last year, the first time inventory has grown this fast since the city's post-pandemic price run started. Sales fell 13% over the same period.
That combination, more homes available, fewer being bought, should signal a correction. It hasn't. The median price across most property categories continues to climb, though the pace is slower than the 2020-2022 surge. Sellers are holding firm. Buyers are waiting.
Why more inventory hasn't broken the price floor
The August numbers show a market where neither side is willing to compromise. Sellers who watched their neighbours' homes appreciate 40% between 2020 and 2024 have anchored their expectations to those gains. Many are still listing at prices that reflect what comparable properties sold for six months ago, not what buyers are willing to pay today.
Buyers, meanwhile, face the arithmetic that hasn't budged much: with the Bank of Canada's policy rate at 2.25%, the stress test still requires qualification at a rate roughly two percentage points higher. A household earning $120,000 can qualify for about $535,000 in mortgage financing under current rules. The median single-family home on the Island of Montreal now sits well above $600,000 in most central neighbourhoods. The 18% inventory increase gives those buyers more homes to choose from, but their borrowing power has not changed materially. A household earning $120,000 still qualifies for about $535,000.
Sales volume dropped by double digits, but prices didn't follow because the homes changing hands are concentrated in segments where buyers still have access to credit, either higher-income households, repeat buyers with equity from a previous sale, or investors with cash reserves.
The stale listing problem no one is naming
Not all inventory is equal. The 18% surge includes homes that have been relisted multiple times, properties priced 10-15% above recent comparables, and units in buildings where condo fees have risen faster than wages. Walk through listings in Laval or the North Shore suburbs and you'll find the same dozen properties appearing in search results week after week, each time with a small cosmetic update to the photos or description but no movement on price.
Quebec's land transfer tax, the Welcome Tax, takes roughly $9,400 from a buyer purchasing a $650,000 home in Montreal on closing. That's capital the buyer cannot deploy as a down payment, and it makes the decision to move more expensive than in other provinces. When inventory rises but prices stay high, that tax becomes a reason to wait rather than settle.
What happens when sellers lose patience
More homes on the market now points forward, not backward. Markets don't correct immediately when supply outpaces demand. Sellers wait. They relist. They take the home off the market and try again in spring. But after six to twelve months of carrying costs, mortgage payments, property taxes, maintenance, without a sale, expectations start to shift.
Montreal is three months into this pattern. If inventory continues to climb through fall and winter, the sellers who need to move, job relocations, estate sales, investors holding cash-flow negative properties after stricter short-term rental rules took effect, will be the first to drop their ask. That's when the 18% becomes meaningful.
Until then, the disconnect persists. Buyers have more choice than they've had in years. Prices keep edging higher. And both sides are waiting for the other to blink first.
Sources
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