House Hunting in Canada: A Rowhouse in Old Montreal With Income Potential
- by NewYorkTimes
- Sept. 9, 2020
This four-story attached greystone rowhouse is in Old Montreal, the historic riverside district just east of Montreal’s downtown core. The property faces Marché Bonsecours, a restored 1847 building that once housed the city’s main public market. Behind the market building are Montreal’s Old Port and the St. Lawrence River.
“This is the beating heart of scenic Old Montreal,” said Felix Jasmin of Engel & Völkers Montreal, the listing agent.
Built in 1870, the six-bedroom, three-bathroom house offers 12,000 square feet of living space, including a detached rear carriage house. From the street, an arched entryway opens to a long entry hall and double-sized living room whose gleaming marble floors once adorned the Bank of Montreal’s headquarters nearby. “The owner’s contractor happened to be the guy demolishing the bank,” Mr. Jasmin said.
Tall, latticed windows run the length of the living room, illuminating its exposed-brick wall and whitewashed surfaces. “The wooden windows are very typical of Old Montreal,” Mr. Jasmin said. The living room connects to a formal dining room with an enormous chandelier and brick-encased decorative fireplace.
The dining room links to a small, furnished solarium with a glass ceiling and a French country feel. “The idea was to have your aperitifs in the living room, dinner in the dining room, and your liquor in the solarium,” Mr. Jasmin said. From the solarium, a door opens to a small back terrace. The home’s kitchen, also off the solarium, “was meant as a functional kitchen, for catered meals, and it’s a very different look from the rest of the house,” Mr. Jasmin said.
A curved staircase ascends to the main suite, which occupies the entire second floor. “This was the owner’s private floor, and it’s the masterpiece of the building,” Mr. Jasmin said. “It feels like a Parisian apartment.” A large bedroom with en suite bath flows through a wide archway into a high-ceilinged, tiled living room. A pair of cast-iron doors conceal an office, which Mr. Jasmin said could become a bedroom.
Five bedrooms occupy the building’s third floor, though only one bathroom. The floor has a small kitchen with a washer-dryer and a dining area. A spiral staircase leads from the third floor to an unfinished attic, “which is almost full-sized. A tall adult can stand in it,” Mr. Jasmin said.
The owner, a Montreal businesswoman who also lives in Paris, “once hosted fashion shows in the house, and many dinners for Montreal’s who’s who,” Mr. Jasmin said. Over a half-century of ownership, she has replaced electrical and HVAC systems, upgraded windows to withstand Montreal winters, and preserved the landmark facade.
The property includes three commercial spaces. The Bremner, a popular seafood restaurant on the lower level, is temporarily closed because of Covid-19. Auberge Bonsecours, a six-room bed-and-breakfast, leases the rear carriage house. A ground-floor storefront space is vacant.
Once written off as tired and touristy, Old Montreal, on the banks of the St. Lawrence River, has become chic over the past decade. Historic buildings along its cobblestone streets have been converted into condos, and many new residential projects have sprouted. High-end retailers occupy spaces once held by souvenir and T-shirt shops. Montreal-Trudeau International Airport is about 15 miles southwest.
“The downside is that parking can be tough,” said Gael Lupien of RE/MAX ACTION Westmount. “You have fewer services than other neighborhoods. And there’s still a tourist vibe, which isn’t for everyone.”
From 2017 to 2019, Montreal largely avoided the sagging price growth across much of Canada. With Quebec’s diversified economy “on fire,” and Montreal as its engine, demand for real estate in the city has “grown dramatically” over the past three years, according to Charles Brant, director of market analysis for the Quebec Professional Association of Real Estate Brokers.
“It’s gone from a buyer’s market to a seller’s market,” Mr. Brant said. “The diversification of our economy keeps drawing highly skilled workers. We have great universities. We’re a center of tech innovation.”
According to an August report from Century 21 Canada, the growth in Montreal’s housing prices during 2020 leads all Canadian cities. The cost of a detached house downtown rose 42 percent over the same period in 2019. Townhouses increased 44 percent, and condos 14 percent.
The average price for a home Greater Montreal in July was 401,300 Canadian dollars ($305,000), a 14 percent year-over-year rise from July 2019, according to the Canadian Real Estate Association (CREA), which cited a surge in activity following the easing of quarantine restrictions.
Likewise, sales volume has rebounded from a precipitous drop during the spring, when the coronavirus pandemic hobbled the economy. Nationally, “new listings reached their highest level on record for the month of July, while sales posted the highest level of any month in history,” CREA reported. Montreal saw 5,356 residential sales that month, a 46 percent increase over July 2019, according to Mr. Brant’s organization.
Still, a June report by Teranet — National Bank of Canada predicted “a marked drop in home prices, about 10 percent nationally, sharper than in any of the country’s last three recessions,” as a result of the pandemic.
A national increase in available homes during July was dominated by gains in the Greater Toronto Area, according to CREA, but Montreal has recently become an attractive alternative to Toronto and Vancouver, Canada’s costliest housing markets.
“Investors see Montreal as the next best place,” said Liza Kaufman, founder of the Kaufman Group at Sotheby’s International Realty Quebec. “Historically, we’ve always lagged because of political instability related to Quebec independence, but that’s no longer a factor.” And, she added, Quebec doesn’t have a foreign buyer’s tax, something British Columbia instituted in 2016 and Ontario in 2019.
The city’s thriving tech, artificial-intelligence, and biotech sectors should continue to propel the market and insulate Montreal from Covid-19’s worst economic headwinds, Mr. Jasmin said. “We have this beautiful pressure of high-paying jobs and many newcomers.”
In Old Montreal, homes are rare, said Carole Baillargeon of Century 21 Immo-Plus, who has specialized in the neighborhood for 20 years. The area’s housing stock is mostly condos, “with maybe 25 houses,” she said. “People love the Old Port area, and it’s a very small district, so anything here should retain its value long-term.”
Despite the market’s overall strength, however, the pandemic has hit the neighborhood hard. Asian and American buyers who had invested in the neighborhood are staying away. “The border’s closed. Nobody’s coming,” Ms. Baillargeon said. “Some investors bought condos to rent on Airbnb, but that’s gone. And parents bought units for children in college here, but that’s on hold.”
In Ville-Marie, the borough that includes Old Montreal, condo sales declined by 52 percent in the second quarter of 2020 compared with the same period in 2019, said Francis Cortellino, ana economist at the Canada Mortgage and Housing Corporation, Canada’s national housing agency. But prices weren’t affected because “supply is still quite low.”
Condos in the neighborhood range from about 375,000 to more than 7 million Canadian dollars ($285,000 to $5.3 million), with many in the high six figures. Prices “have actually come down a bit, which I’ve never seen,” Ms. Baillargeon said.
Mr. Jasmin said locals are currently fueling demand. “We’re not talking investment properties, we’re talking homes,” he said. “Because of the pandemic, people are buying that house they wanted to buy or moving to that neighborhood they’d always contemplated.”
Ms. Kaufman, whose listings include large homes and luxury condos in affluent neighborhoods just outside the downtown core, is still seeing “investors from Asia and Europe who want to move somewhere perceived as safe and financially sound.”
Mr. Jasmin said American buyers have also increased in number, with some purchasing after virtual visits. “They tell us they’re tired of the politics at home,” he said.
Meanwhile, he added, Chinese investors, who had been active in the market before Covid-19, have held back. “The money’s stuck in China.”
There are no restrictions on foreign buyers in Quebec. Banks, however, require a minimum down payment of 35 percent for nonresidents, according to Julie Côté, supervisor in nonresident taxation at the accounting firm FL Fuller Landau. (Canadians can put down as little as 5 percent.) Banks also ask for “a lot of paperwork” from non-Canadian buyers to ensure the provenance of funds, Ms. Côté said, a process that can take up to six weeks. “I’ve seen a lot of sales postponed because of that,” she said. Many foreign buyers choose all-cash transactions to avoid the process.
Under Quebec law, buyers and sellers must work with notaries, not attorneys, on real estate transactions. Because of Covid-19, foreign buyers can now execute documents electronically rather than through power of attorney or in person, said William Malkinson, a notary with Drazin Friedman Notaries in Montreal.
Tourisme Montreal: mtl.org/en
City of Montreal: habitermontreal.com
French and English; Canadian dollar (1 CDN = $0.77)
Notary fees range from 1,200 to 1,500 Canadian dollars ($900 to $1,150), Ms. Côté said, with agent commissions around 4 to 5 percent. Buyers also pay combined provincial and federal sales taxes totaling 15 percent of the sale price, she said.
Annual property taxes on this home are about 43,000 Canadian dollars ($32,800), Mr. Jasmin said.
Felix Jasmin, Engel & Völkers Montreal, 514-507-7888, montreal.evrealestate.com