When it comes time to consider buying property, choosing the right neighborhood is probably the first decision to be made... along with your budget. Ironically, the two are intrinsically linked, given that a house in Auteuil, Laval will not cost the same as a property in the heart of Montreal's Mile End district, for example. One thing is certain: districts change from year to year, along with their economic value.
We are currently witnessing the gentrification of some districts -hello, Hochelaga! - or the creation of new urban centres – greetings, Griffintown! These new and revived districts blur the lines and can cause future buyers to stay on the lookout for the next great economic opportunity. The goal: buy there now or, soon enough, everyone else will also want to do it.
One question arises: in concrete terms, what added value do these neighborhoods bring to the table?
New neighborhoods respond to a demand, a real need, says François Des Rosiers, a professor in the finance, insurance and real estate department of Université Laval. “It marks a return to the centre and services. Among the targeted clientele, there are those who want to free themselves from maintenance constraints and opt for a condo formula after living on the periphery,” he explains. “Another type of clientele consists of new buyers who don’t yet have children: young professionals who want to enjoy the urban lifestyle.” Whichever the case, most major cities are witnessing the re-use of industrial sectors which are becoming residential. “We are seeing it in Quebec City. The city has defied imagination by transforming vacant lots into residential areas - particularly upscale ones. It has spread like wildfire and it keeps people who are thinking of leaving,” notes the professor.
However, be careful to not take the bait of new and popular districts too quickly, warns Joanie Fontaine, an economist at JLR Solutions foncières. “Look at Griffintown, for example: you have to be careful. A lot of construction creates a buzz, yes, but at the same time, it creates competition and less growth. It may be more economically attractive to buy in a neighborhood where there is less opportunity,” she adds.
Neighborhoods in Revival
What about neighborhoods in full revitalization which have become the talk of the town? You have to sniff out a good deal in order to invest at the right time. The phenomenon is not new. “Over time, neighborhoods deteriorate and, at a certain point, a new clientele reinvests in it. That’s called gentrification, which is what happened in districts like the Plateau and Mile-end. When I was young, no typical Québécois would have thought of going to live there, because they were predominantly immigrant and Jewish neighborhoods. Today, we know the value of these neighborhoods...,” says Professor Des Rosiers. Joanie Fontaine agrees. “Revival and gentrification will increase the value of homes. That’s what happened in districts like Plateau Mount-Royal several years ago. Now, districts such as Rosemont-la-Petite-Patrie, Villeray, St-Henri and Hochelaga, for example, are being watched. But it’s difficult to single out particular neighborhoods because, from project to project, the added value can change,” she says.
Frédéric Amiand, a City of Montreal relations officer, confirms that the city is making significant investments to transform several residential development sectors. “Since 2014, nearly half of Montreal's housing starts have been concentrated in the Ville-Marie borough. Several sectors of the city are also experiencing a noticeable dynamism, such as Cours Outremont, where a large development is planned that will include university buildings, local shops and 1, 300 homes,” we’re told.
How to choose the right neighborhood and get a good deal
Certainly, the value of a neighborhood depends on the needs and aspirations of the buyer. Some prefer proximity to the metro, while others want a quiet environment or a variety of services that are within walking distance. There are multiple factors involved in making a property a good investment. Changes in future demand and competing supply have notable effects. So, how can you sniff out THE district in the making?
“You should target sectors that have not yet reached their peaks and follow the trends,” suggests François Des Rosiers. “You need to look at the growth of prices and rents. Real estate brokers and appraisers follow the market and get a good feel for which way the wind will blow. They can help buyers a great deal in that sense,” he adds.
Is positioning yourself next to a future suburban train line a guaranteed strategy? One thing is certain, owning and driving a car costs several thousand dollars a year. For that reason, many families want to drive less (or not at all!). It has also been proven again and again that buying near metro or train lines offers added economic value. For Joanie Fontaine, that is something to seriously consider. “Transit is an interesting factor, and buying near future EMN lines can be profitable investments,” she says. François des Rosiers agrees, while nuancing. “On the south shore, where public transit is still underdeveloped, it’s been possible to calculate up to a 13% increase in the value of residential properties within walking distance of the future commuter train in St-Bruno or St-Lambert,” the professor explains. However, it isn’t a guaranteed strategy. “On the north shore, however, there is already less of an impact, as travel alternatives are more abundant.”
Choosing the right neighborhood is certainly an element to be considered from an economic point of view. However, above all, people choose their place of residence based on how it matches up to their needs and values!
Finding new homes in reviving neighborhoods
On the South Shore
On the North Shore
In Montreal's island