Has the Canadian real estate market been immune from the coronavirus pandemic? Despite the COVID-19 public health crisis decimating the national economy and leaving more than two million people out of work, Canada’s housing sector has not only survived, but has thrived under today’s economic conditions. Before the highly infectious respiratory illness disrupted the economy, the real estate industry was booming. Nearly a year into this pandemic, sales activity and prices have been soaring. Hamilton is one of the many red-hot markets in Canada to witness an incredible surge during the coronavirus pandemic. Hamilton real estate was doing rather well before COVID-19 effectively paused the nation, but it has been lift-off for the city in 2020, thanks to a wide range of factors.
What are the trends that agents, sellers and homebuyers are looking at today? Let’s explore some of the most recent data coming out of Hamilton, to see if the numbers can give us a glimpse into the next year.
The Hamilton Real Estate Trends That You Need to See
Although sales activity and prices were slightly slower month-over-month in October, the Hamilton real estate market is doing even better than it was the same time a year ago, reports the REALTORS® Association of Hamilton and Burlington (RAHB).
According to the latest RAHB report, sales of residential properties located within the RAHB market area climbed 23.7 per cent year-over-year in October. The average price of homes increased at an annualized rate of 19.8 per cent to $721,523. On a monthly basis, sales were down 7.6 per cent and prices were up 0.02 per cent.
But while houses are enjoying a boom, condominium prices are beginning to stagnate, says a new housing report by RBC Economics. The study concluded that condo prices have already flattened in Hamilton, Toronto and Vancouver, with RBC economist Robert Hogue writing that the “impact of COVID-19 on the housing market is complex.”
Industry observers are paying attention to inventory levels. The number of active listings fell 39.8 per cent in October from the same time a year ago, while new listings were only up 5.5 per cent from 2019.
“The trends this fall are not reminiscent of what we would normally see – with October activity slowing slightly compared to September – and this is due to 2020 not being a typical year,” said RAHB President Kathy Della-Nebbia in a news release. “As a result of COVID-19, we experienced a delayed spring market and a surge in record activity over the summer months when the province began to reopen. As a result of this unstable year, active listings at the end of each month are some of the lowest we’ve seen, exacerbating low inventory levels and continuing to drive average price.”
The head of the real estate association further noted that Hamilton would unlikely experience a downturn like it temporarily endured during the first wave of COVID-19. That is, if demand remains strong and the economy – nationally or provincially – does not shut down. Della-Nebbia added that the number of new listings could be one of the contributing factors to higher prices.
“These unprecedented times are where the services of a local RAHB REALTOR® are invaluable. We will continue to work with clients to ensure their housing needs are met, and will continue to use virtual technology and sanitary measures to combat COVID-19,” Della-Nebbia stated.
Should there be another coronavirus-induced shutdown, it is more than likely that the real estate industry will be spared from being mandated to close. But, like earlier this year, agents will pivot and innovate, adapting to the environment and utilizing digital tools – such as virtual tours and e-signing – to allow real estate transactions to take place safely.
Will the Second Wave Differ from the First?
Have conditions changed from the first wave to the second?
During the first wave of the highly infectious respiratory illness, the federal government and the Bank of Canada (BoC) were beginning to implement policies to adapt to the changing economic landscape and stop the bleeding. From income support payments to ultra-low interest rates, Ottawa acted quickly and swiftly to prevent a full-blown economic collapse. Should the second wave ignite another public health disaster, the market already possesses the tools it needs to endure a financial crisis.
The central bank’s near-zero-interest-rate-policy (ZIRP), which is unlikely to be raised anytime soon, has facilitated the massive growth in the Canadian housing sector. The BoC has also slashed the benchmark five-year mortgage rate to below five per cent. The Hamilton real estate market has benefited from historically low borrowing costs, allowing homebuyers to have more options at their disposal. So, if bidding wars ignite over Hamilton properties, Canadians can feel confident that they have the means to put up a fight for their dream home.
Ultimately, policymakers have signalled that they are willing to do anything to support both the economic recovery and the real estate sector.
Winter Is Coming (whether we like it or not)
Winter is right around the corner, which is typically bearish for the real estate sector. Could Hamilton – and the broader housing market – cool down like the temperature outside? It has been argued by some that the pent-up demand has been exhausted, but with interest rates at historic lows and the economy on the road to recovery, it is possible that we will slide into 2021 with the same strong market activity that we’ve witnessed over the past few months.