“More than Cranes on the Skyline”: iShares S&P / TSX Capped REIT Index ETF Stock (TSE:XRE) Notches Up as Montreal Data Improves

Something of a bright spot in Canadian real estate emerged as housing data from Montreal slipped out. Prices are up, but so too are sales, in an unexpected dichotomy that suggests people do indeed value housing more than might be expected. This in turn provided a boost to the iShares S&P / TSX Capped REIT Index fund (TSE:XRE), which notched up fractionally in Monday morning’s trading.

Word from the Quebec Professional Association of Real Estate Brokers noted that 4,992 homes were sold in May. That is actually up 10.2% against the figures from May 2024, when 4,532 homes were sold. This likely comes as a shock to most outside observers, especially when noting that price growth is likewise not slowing down any. This represented the third consecutive month of sales growth, which suggests that earlier reports about debt concerns in the Canadian real estate market may have been overblown once you hit Quebec.

A single-family home in the Montreal area rose to $625,000, reports noted, while a “plex”’s medium price increased to $825,000. That is an 8.7% rise and a 5.1% rise respectively. Condo prices also gained, though at the lowest rate of the three, rising to $427,500, a 4.3% gain.

One in Three

But there is another, potentially larger, problem lurking under the surface: investor-owned houses. One report notes that investors currently own one home in three in Canada, which makes calls from new Prime Minister Mark Carney to build aggressively ring hollow. Building more houses is all fine and well—basic supply and demand laws say a glut of houses should lower prices—but when investors buy houses at the rates they already have, it is easy to wonder if more “cranes on the skyline,” as one report noted, will be the answer.

Addressing matters of affordability, and getting people to actually buy the newly-constructed houses, is perhaps the most likely solution in turn, some reports assert. If investors keep buying at the rates they are, it really does not matter how many houses are built; deeper pockets will scoop them up and the problem will go unsolved.

Is the iShares S&P / TSX Capped REIT Index ETF a Good Buy Right Now?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:XRE shares based on 13 Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 6.39% rally in its share price over the past year, the average TSE:XRE price target of C$17.34 per share implies 10.04% upside potential.

See more TSE:XRE analyst ratings

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