Hamilton Real Estate Market is Bubbling

For more than a decade, the Hamilton real estate market has benefited from the significant price gains in Toronto. Many families felt they were priced out and decided to relocate a little bit west to the Hamilton housing market, where they could buy the home they wanted, at a budget they could afford.

Fast forward to the post-pandemic housing market, Hamilton’s average detached home sells for more than $1 million. How much was it just 10 years ago? A little below $300,000.

Today’s housing environment is a tough nut to crack for first-time homebuyers and young families searching for starter homes. But, according to local real estate experts, prices for these residential properties are rising.

Put simply, it has become a tale of two cities in Hamilton, and all it took was 10 years.

This year, is the red-hot Hamilton housing market being doused by higher interest rates? Suffice it to say, affordability continues to be a significant issue in this part of the Ontario real estate market.

Hamilton’s Boiling Real Estate Market

According to the REALTORS® Association of Hamilton and Burlington (RAHB), residential property sales tumbled 31.9 per cent year-over-year in May. On a month-over-month basis, home sales fell 5.1 per cent.

Both detached and townhome sales declined at an annualized pace of 32 per cent and 30.5 per cent, respectively. Detached sales totalled 834, while townhouse transactions totalled 239.

Although prices are up from the same time a year ago, they are down at a monthly pace. The average sale price in the Hamilton real estate market surged 17.6 per cent year-over-year, but they are down 1.7 per cent from last month.

Once again, price movements were different on a YoY and MoM basis for detached and townhomes. Association data found that the average sale price for detached homes climbed 18.9 percent from April 2021 and fell 2.2 per cent from April 2022 to about $1.1 million. Average townhome prices dropped 5.6 per cent month-over-month but rose 14 per cent year-over-year to $817,253.

Apartment prices fell 5.6 per cent month-over-month, to $669,477, but that figure is up 25.6 per cent year-over-year.

“Apartment-style properties had the highest inventory levels in May in contrast to all other property types across the RAHB market area, with nearly two months of inventory available,” says Piriano. “Apartment-style properties continue to have the most affordable price point which is typically between $500,000 and $700,000.”

However, detached inventory may be starting to come back on stream. RAHB data show there were 1,811 new residential-detached properties listed in May, up 8.1 per cent month-over-month, and a 13.7-per-cent increase year-over-year. The inventory of single-detached properties increased from 1.3 months to 1.7 months.

For new townhomes listed in May, units increased 3.2 per cent from the previous month to 481 units. The supply of townhomes clocked in at 1.4 months, up from 1.2 months.

New listings for apartments increased 3.9 per cent on a monthly basis and 12.6 per cent year-over-year. In total, there were 295 new apartment-style listings in May.

“Apartment-style properties had the highest inventory levels in May in contrast to all other property types across the RAHB market area, with nearly two months of inventory available,” says Piriano. “Apartment-style properties continue to have the most affordable price point which is typically between $500,000 and $700,000.”

Another noteworthy development is the slowdown in new housing construction activity. According to Canada Mortgage and Housing Corporation (CMHC), housing starts declined nearly ten percent from the same time a year ago, totalling 467 units in April. In the first four months of 2022, housing starts totalled 1,019 units, down 31 percent from the same span last year.

Are Bargains Coming for the Hamilton Real Estate Market?

At the start of the coronavirus pandemic, there was some belief that there would be a COVID discount. While there was a two-month span where prices had dipped, it was the start of a meteoric ascent for most Canadian housing markets. Although financial experts think that there will be a double-digit drop in prices in many places nationwide, it is unlikely to serve as a bargain for prospective homeowners.

RAHB President Lou Piriano recently told 900 CHML’s Bill Kelly Show that homebuyers need to have “realistic” expectations in this new market.

“The market is slowing, but it’s by no means dead,” he said. “It’s a mixed bag, with some properties still getting multiple offers and some sitting on the market.”