In the last 5 years, Griffintown condos have been selling like hotcakes. If you’re looking at buying your first condo, there’s perhaps no other area that sparks your curiosity as much as this neighborhood.
But is buying a condo in Griffintown the right move for you?
In this article, we go over key points about the neighborhood and factors that may affect future prices.
Why Is Griffintown So Popular?
It all starts with ideal location.
Griffintown borders Notre Dame to the North, the Lachine Canal to the South, the Bonaventure Expressway to the East and George-Vanier Boulevard to the West:
In short, Griffintown is close to all the action.
Residents are within walking distance of the two largest work centres of Montreal: the Downtown Core (15-20 minute walk) and the Old Port (10-20 minute walk):
Griffintown is also within a 5 minute drive to two bridges leading off Island (Victoria and Champlain), a 2 minute drive to Highway 20, and a 10 minute drive to Highway 15 (more like 30 minutes now that the Echangeur Turcot is being rebuilt).
But it’s not just that.
Within walking distance, Griffintown residents have access to the restaurants and entertainment of Notre Dame as well as the Old Port.
Not to mention that Parks Canada invested millions into landscaping and upgrading the Lachine Canal bike bath (also within walking distance).
When you live in Griffintown, you have almost everything you need close by. While the number of commerces isn’t the same level as The Plateau, businesses are setting foot in the area.
Finally, the City of Montreal is investing over $140 million into the neighborhood. This will significantly improve lifestyle in the neighborhood by creating new parks and modernizing streets to “hybrids” (pedestrian-friendly by widening sidewalks and planting more trees):
The Neighborhood’s Demographics
Take a walk in Griffintown and all you see are young professionals.
Why is that?
Well, buying a condo in Griffintown strikes the right work-life balance for millennials. This demographic favors the amenities and location of the neighborhood over the suburban life.
Just how young is the neighborhood? Take a look at these stats:
Being close to the Downtown Core and the Old Port, Griffintown also attracts young professionals.
The Griffintown Condo Market Is Booming
As this article is being published, every real estate expert in Montreal agrees on this: the Griffintown condo market is hot.
It’s new, it’s cool and it’s in the perfect location.
Not only that, land for new condo builds is limited.
Investors are seeing the value in buying a Griffintown condo because of future scarcity.
Eventually, there just won’t be any room to build new ones. When that happens, prices are likely to climb even further.
Fears of Overbuilding Have Been Quashed
In 2016, there were fears that building too many Griffintown condos so quickly would precipitate a decline in prices. The logic was that builders were creating a glut in supply.
Fortunately for existing Griffintown condo owners, that fear hasn’t materialized.
As we’ll examine below, 2018 showed the strongest rise in prices in the last 5 years. Not only that, units on the resale market are selling faster than ever before.
How Have Condo Prices in Griffintown Changed?
As this article is being written, the price per square foot for a 1 or 2 bedroom resale condo in Griffintown is hovering at around $450/sq.ft.
Of course, that’s an estimate based on all sales in the neighborhood. There’s developments like the Yoo where the price per square foot may be even higher.
It also doesn’t factor in bachelor pads which have a higher per square foot cost than 1 and 2 bedrooms.
According to our own data, the price per square foot has been steadily increasing over the last 5 years with 2018 showing a sharp spike in appreciation:
Market Outlook for Years to Come
As a condo buyer, you’re probably hoping that buying and holding a condo in Griffintown for a few years will increase your net worth. There’s a few factors you need to consider before making a purchase.
Factoring in the Foreign Investor Effect
Following the foreign investor taxes imposed in Vancouver in Toronto, Chinese investors in particular have shifted their focus towards other markets.
Juwai.com (a site that links Chinese investors with available properties) reported a huge increase in real estate inquiries for Montreal.
Just how much?
Chinese investors were looking at buying 1.45USD billion worth or real estate in the city. They say that this represents an 84.5% spike in interest in 2017.
On the other hand, foreign investor interest in Vancouver is slipping, seeing a decrease in inquiries of 18%. That money train is headed for Montreal and fast.
Griffintown is still an undervalued market and investors, both domestic and foreign, are taking advantage of it.
What does that mean for you?
It’s likely the foreign influx of money will increase the value of your Griffintown condo if you were to buy soon. Granted that the 1.45USD billion isn’t all for the neighborhood (foreign investors typically buy luxury real estate), it’s safe to assume that if the Montreal market rises, so will Griffintown’s.
Not to mention that these days it’s not uncommon to see coach buses of Chinese investors checking out Griffintown pre-construction condo sales centres.
Signs the Real Estate Market May Be Overheating
The flip side to foreign investment are fears by the federal government that the Montreal real estate market is overheating.
According to the Canadian Mortgage and Housing Corporation (CMHC), the sales-to-new listings ratio was hovering near 69%. Note that economists use 70% as a benchmark for an overheated market. Most of that activity is in the West Island, Sud-Ouest (Griffintown, Verdun), Notre-Dame-de-Grâce and Île-des-Soeurs.
Again, what does this mean for you?
If lawmakers decide to intervene by imposing foreign buyer taxes like in Vancouver and Toronto, it could decrease how much your condo can gain in value. Vancouver and Toronto saw decreases in real estate activity when this happened.
Or look at it from a different point of view:
If the market overheats and lawmakers don’t intervene, it makes it harder for buyers to close on a property. You sometimes hear the term “seller’s market”. When that happens, sellers can be:
- More aggressive in pricing;
- Entice bidding wars;
- Less willing to negotiate, or;
- All of the above.
All that could make it harder for you to buy a resale condo in Griffintown. That leaves you with pre-construction condos. These can be difficult to buy because of the higher down payment requirements.
Some Economists Are Predicting a Recession
Without getting conspiratorial, there are signs the US economy is heading for a recession. When that happens, the effects will likely be felt in Canada.
Truth be told, predicting when recessions hit is sometimes a shot in the dark.
However, knowing that recessions generally occur every 8-10 years, what does this graph tell you:
Even harder than timing recessions is predicting the exact impact it’ll have on specific sectors of the economy.
The general rule is that the real estate market fares well through recessions. But that’s not a guarantee.
You just don’t want to buy in a hot market and the month after you take possession, the market goes through a correction.
Granted that if you’re buying a condo in Griffintown for the long run, you’re unlikely to lose money. Sure, prices fall during recessions, but they eventually bounce back.
What it really comes down to is how recession-proof your job is.
Is Buying in Griffintown a Good Investment?
The fundamental appeal of the area (walking distance to work, proximity to amenities) isn’t going away.
What it comes down to are your long term plans.
There may be opportunities to make money if you a buy pre-construction condo. You may expose yourself to the risks of real estate market fluctuations. However, developers are selling condos deliverable in 2020 and 2021 that are under current condo price growth rates.
On the other hand, if you plan on buying a resale condo in Griffintown, you’re buying at higher prices than 2014-2015. While you missed the boom, if the market continues to grow at a steady pace, you still stand a chance at appreciation. The fundamentals of Griffintown (location and amenities) aren’t changing any time soon.
Should You Buy a Pre-Construction or Resale Condo?
In general, when you buy pre-construction, you’re paying for a future condo at today’s prices. By the time you take possession 2 or 3 years later, the value of your property is likely to increase.
Griffintown is no different. Builders continue to maintain prices for new condo projects competitive with the resale market.
If you can wait, you should buy pre-construction (note that moving into a new build has aches and pains too). As we noted earlier, developers are selling at prices just under current market appreciation trends.
However, given investor interest in the neighborhood, you may not get the chance to buy a pre-construction condo. That’s because investors and VIPs get early access to buy the most profitable units. If you’re looking to buy a specific type of property (example, a 2-bedroom and den, or a micro condo) you should consider both resale and pre-construction options.
At the moment, there aren’t bidding wars in Griffintown and it’s premature to call it a seller’s market. Buying resale is still affordable for first time condo buyers. Additionally, condo fees are also low which makes resale an affordable option for most buyers.
