A Fresh Look at Hamilton Real Estate

Has the Hamilton real estate market joined the broader Canadian housing sector? The latest data suggest that one of Canada’s biggest real estate markets is witnessing diminishing demand and sliding prices while supply levels are improving.

For years, many households from Toronto had relocated to Hamilton because housing market fundamentals were more sustainable and stable than what had been unfolding in North America’s fourth-largest city. But since too many families had the same idea, demand for limited supply spiked, leading to significant price growth. The COVID-19 public health crisis, which resulted in historically low interest rates and exceptional federal and provincial stimulus, exacerbated the situation.

But the current rising-rate environment might be reviving a modicum of stability in the Hamilton real estate market. So, what are the latest numbers showing exactly?

Hamilton Real Estate is Still Bubbling

According to the REALTORS® Association of Hamilton-Burlington (RAHB), residential property sales in the Hamilton real estate market plunged by 44 per cent year-over-year in November, totalling 425 units. Year-to-date housing transactions declined more than 31 per cent, with 6,635 units changing hands.

The average residential price also fell from the same time a year ago, sliding 8.8 per cent to $761,244. However, on a year-to-date basis, the average cost for a home sold in Hamilton climbed 12.3 per cent to $893,228.

That being said, association data revealed that some property types have performed better than others compared to this same time last year.

Detached

• Home Sales: -46 per cent to 274 units
• Average Price: -11.3 per cent to $819,340

Semi-Detached

• Home Sales: -55.3 per cent to 21 units
• Average Price: -0.1 per cent to $730,805

Townhome

• Home Sales: -13.9 per cent to 99 units
• Average Price: -9.3 per cent to $684,630

Apartment

• Home Sales: -66.3 per cent to 30 units
• Average Price: +6 per cent to $521,474

Meanwhile, housing stocks have improved over November 2021, as new listings were down just 3.2 per cent to 791 units. Active residential listings spiked 221 per cent to 1,278 units. In addition, months of inventory – this is a measurement that gauges the number of months it would take to sell current inventories at the present rate of sales activity – rose to 3.01 months.

Although new housing construction activity has slowed slightly this year compared to the first 10 months of 2021, it picked up quickly in October. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts soared more than 322 per cent year-over-year to 355 units in October.

“There is no question that we have seen a shift from the unsustainable activity that occurred throughout the pandemic as some of the supply challenges have eased,” said Lou Piriano, President of RAHB, in a statement. “While fewer new properties are being listed below $800,000, there are more opportunities for buyers looking to move up in the market. The danger for both buyers and sellers can be trying to time the market. With conditions sometimes turning quickly or silently, it is important to talk to a professional RAHB REALTOR® who is plugged into the local market.”

Ultimately, because of multiple factors happening simultaneously – elevated inflation, rising interest rates, supply challenges, and market uncertainty – local industry observers contend that the varying price trends in the Hamilton real estate market will persist.

Housing Affordability

The National Bank of Canada recently published its latest report on housing affordability in the third quarter, confirming that it is the lowest in Canada since the early 1980s. The recent figures suggest that median households would need more than two-thirds of their income to carry a mortgage. But it is much higher in major urban centres, such as Vancouver (102.1 per cent), Victoria (100.5 per cent), Toronto (93.1 per cent), and Hamilton (68.1 per cent).

The most affordable markets were Edmonton (31.7 per cent), Quebec (32 per cent), Winnipeg (33.9 per cent), and Calgary (37.2 per cent). Does this mean it is time to move to the Prairies or start speaking French?

Suffice it to say that the median household income needed to afford a home in the Hamilton real estate market would be approximately $223,000. Considering that the median household income nationwide before taxes was $70,332 last year, this could be difficult for most families looking to purchase a home in many Ontario housing markets like Hamilton.

In the end, however, the Canadian real estate market is cooling down from the meteoric ascent during the coronavirus pandemic. Now that interest rates are climbing, the data shows that the housing sector has transitioned away from the frenzy at the height of the 2020-2021 boom. Although the drop in prices is not falling as fast as the gains from the pandemic-era market, this might still present a buying opportunity for households with a down payment and income to maintain a mortgage.

Sources
NBC: https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf
RAHB: https://creastats.crea.ca/board/hami
CMHC: https://www03.cmhc-schl.gc.ca/hmip-pimh/#Profile/0610/3/Hamilton