Welcome to the Guardian Financing May 2019 monthly newsletter. This month’s issue is on how the market conditions have challenged homebuyers from the lucrative Montreal neighborhoods.
The market conditions in Montreal neighborhoods have officially become unpalatable for homebuyers. There isn’t a single neighborhood in Montreal in which you can find favorable conditions for buyers, and though this has been anticipated in the past, no one expected that we would reach this conundrum so quickly. Rising prices, increased competition, and shorter selling times have not made it any easier for the average buyer to find an acceptable offer without the possibility of a fierce bidding war.
There are various metrics for determining market conditions, and Sales to New Listings (SNLR) Ratio is one of the most common ones used by both buyers and sellers to gauge whether it would be appropriate for them to make a move. This ratio is simply a comparison between the number of new listings hitting the market, and those that have been sold over a given time.
When the SNLR is between 0% and 39%, the market is classified as a buyer’s market, which simply means that the quantity listings exceed demand – a scenario that increases the buyer’s bargaining power. Such a market is not suitable for sellers because, due to the increased supply, the prices are likely to go down, and most sellers will refrain from selling their property.
When the SNLR is between 40% and 60%, then it is a balanced market, and everything is moving according to the law of supply and demand. However, when the SNLR is above 60%, it means that the demand is high, but the supply is low. Buyers then begin to compete for the limited inventory, leading to an increase in prices and bidding wars. With such market conditions, the seller has more bargaining power, and this is exactly what is being experienced throughout Montreal neighborhoods.
According to the recent data, nearly all the Montreal neighborhoods have an SNLR of above 60%, with none being below 40%. As such, the demand for the limited available units is very high, thus edging out the bulk of the buyers who are not willing to spend more or get entangled into fierce bidding wars. Only time will tell whether market conditions will change to become more favorable to home buyers in Montreal.
Guardian Financing is a direct private mortgage lender. We serve the greater Montreal area providing short term residential mortgage loans, typically ranging from $50,000 to $3,000,000. Contact us today to discuss your file at 514-700-3121 or by email at files@guardianfinancing.ca
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