The classified ads tell woeful tales of $250,000 houses reduced for quick sale and tenants willing to take substantial losses on unexpired leases in the predominantly English-speaking sectors of this city.
In the 16 months since the Quebec government under Premier Rene Levesque came to power and passed legislation making French the official language of business and most education, the exodus from Montreal of English-speaking Canadians, along with Americans and other English-speaking foreigners, has accelerated.
As many as 60,000 residents, or 5 percent of the population of the western city, may have moved away, according to Martin E. Borner, president of the Montreal Real Estate Board. This estimate is strongly disputed by French-Canadians, but no definitive figures seem to be available.
As a result, there is little movement in luxury residential properties priced above $100,000, Borner said. These houses on the market for long periods, and when they do sell it is often for well below the asking price, he noted.
The market value of these homes is off anywhere from 15 to 30 percent from the peak prices of two or three years ago. Lenders have become more cautious, granting mortgages on a maximum of half the purchase price - at 10 1/2 percent interest.
Those who sell at a sacrifice, Borner said, tend to be executives whose corporations pay for their relocation or wealthy individuals who choose to forego profits on houses purchased several years ago because they believe prices will go even lower.
Because of the tremendous appreciation of real estate until recently, home owners of long standing can still sell and come out ahead - if buyers can be found. Yet, when Montreal homeowners move to Toronto - as many corporations are doing - they find the reverse situation; the equivalent of a $85,000 house here costs $120,000 in Toronto.
Rentals and sublets are increasing as both homeowners and corporations seek compromise interim solutions. Homeowners who are unwilling or unable to sell out look for tenants. Businesses adopting a wait-and-see attitude toward the Levesque government prefer to place their executives in rental accommodations so they can pull out easily if necessary.
In the middle price range, more activity is recorded as native English-speaking Montrealers who have decided to stick it out and French-speaking Montrealers trade up. Construction has halted in English areas and is beginning to slacken in traditionally French neighborhoods.
Housing starts in Canada this year are expected to total about 230,000 units, down from 246,000 in 1977.
In addition to the exodus of English-speaking residents, Quebec housing has also been hurt by trends affecting the entire country: the continuing economic recession, rising interest rates and land costs, plus a two months carry-over inventory.
Federal urban affairs minister Andre Ouellet told the Housing and Development Association of Canada recently that the country has 45,000 excess units. He urged builders who can't find buyers to rent out the recent units. This could help low-income renters find housing, the association's president noted.
Another problem is faulty construction. About 20,000 of the 45,000 vacant units need repairs to make them habitable. The largest share of those uninhabitable units - 16,000 - is in Quebec. On the commercial scene, the situation is stagnant. Real Estate Board President Borner said he could count on one hand the number of new office buildings constructed since the 1975-76 peak. Unemployment in the construction trades now stands at 15 percent.
The office vacancy rate edged up during the last six months of 1977 from 9.3 to 9.6 percent overall, leaving 1.5 million square feet of office space unoccupied, according to the Building Owners and Managers Association of Montreal. While the vacancy rate in prime commercial buildings dipped from 10.6 percent in June 1977 to 8.6 percent in January of this year, it rose from 14.2 percent to 16.2 percent in the northern and western sections of the city.
Prices have softened somewhat in older buildings, although prime locations still command $11 to $12 per square foot.
Large Canadian developers are still building suburban shopping centers here, but since there is also a surfeit of commercial property in Toronto, many of them have turned their attention to building and investing south of the border.
Still, the situation is not entirely bleak, said Borner, whose firm, Montreal International Investment Properties Ltd., specializes in attracting overseas capital into the North American market. He believes that few foreigners who bought large office buildings in Montreal are selling because they look at their purchases as long-term investments and feel the political problems are only temporary.
And, as investors, they dislike the prospect of heavy losses they would encounter now, given the sinking Canadian dollar. Canada's currency is now worth 89 American cents. Like the American dollar, it has fallen sharply against European currencies.