The Quebec real-estate market, post-election

juin 1, 2014

Megan Martin Special to The Gazette
There’s no question that elections have an impact on real estate markets all over the world, and Quebec is no exception. The months leading up to the recent provincial election provided a perfect example of how political instability can stall activity in real estate. Cautious investors and somewhat frustrated sellers notwithstanding, however, the market is slowly starting to improve. “The looming spectre of separation before the last election was a significant deterrent for both foreign and local buyers and it was apparent that our real estate market was affected,” said Liza Kaufman, founding partner of Sotheby’s International Realty Québec LK, based in Westmount. “Investors hate uncertainty. They choose to invest in bricks and mortar because it is secure, but when you add political volatility to the mix they become very conservative.” People love that they can see and feel what they own, Kaufman explained.
“They feel safe investing in real estate because, over time, it always goes up — unlike stocks. But an unpredictable political landscape changes that; it completely stalls the market.” In addition to new investors holding off, many people opted to sell their homes and rent properties while waiting out the election results and any subsequent consequences. Kaufman said this was particularly true for middle-aged to more senior homeowners, who are often at a point in their lives where they’re looking to settle down long-term, and don’t want to deal with the stress related to political instability. Thankfully, in the weeks following April’s election results, which saw a Liberal majority government take over from the previous Parti Québécois minority government, the market has started to rebound as the public regains its confidence in the steadiness of the province. While the current level of activity is busier than it was preelection, real-estate sales are still not as numerous as they were last year. “The fact that it’s a majority government is definitely better than a minority,” Kaufman said. “But vendors shouldn’t expect things to return to pre-election levels immediately.” In the current recovery climate, both vendors and investors need to adjust their expectations. “We’re finding that since the election, the houses that have sold are the ones whose vendors have been realistic in their asking and selling price,” she said. “Prices have adjusted due to buyers’ confidence being shaken by the threats of political insecurity.”
Many of the potential real estate transactions that haven’t closed since the election have entailed several offers, but they haven’t worked out because the vendors have reverted back to their original expectations, and the reality is that the market has changed, she continued. “Properties are moving, but only when vendors are realistic about the selling price,” Kaufman said, adding that she expects the market to continue improving during the remainder of 2014, assuming other factors don’t interfere with that progress. “No one has a crystal ball, but I think the situation will keep getting better and activity will pick up more and more. That’s assuming, of course, that the Quebec economy remains stable.” For anyone looking to buy a residential property, Kaufman offers the reminder that buying a home entails buying a lifestyle, not just a building. “Buyers purchase for many reasons, but most of them are very basic. People need a home to suit their situation, so whether that’s upgrading for more space, finding a convenient home close to work and schools, or downsizing, people will still buy property because it affords them the lifestyles that they want.” That said, buyers should be prepared to pay for value because this isn’t a desperate market. “But at the same time, vendors need to understand the reality of the market today and adjust their prices accordingly,” Kaufman said. “When people have realistic expectations, both buyers and sellers can prosper and be happy with the final result of a transaction.”