Not long ago, the City of Hamilton used to be a prime destination for homebuyers within the GTA looking for more affordable housing options that wouldn’t add hours to their commute. Slowly, however, the housing market within Hamilton heated up and with the increased demand and rising prices, the city is slowly shedding its reputation as an affordable alternative. Below we detail what has been happening within the Hamilton housing market, and what we might see in the months ahead.
The Hamilton Real Estate Market at a Glance
The Hamilton real estate market entered the new year with gusto and the city was poised for a hot spring market ahead. At the end of February, the Realtors Association of Hamilton and Burlington (RAHB) reported a 25.5% spike in number of sales over February 2019, with an average house price of $646,667 – an increase of 15.5% compared to February of last year. At present, there are three dominant trends when it comes to the Hamilton real estate market: high demand, moderating affordability and shrinking supply.
While the number of listings has been showing steady growth, Hamilton firmly remains a seller’s market, given the growing demand. Demand within Hamilton’s market has typically been driven by the city’s low unemployment rates, the lure of surrounding greenbelt and escarpment areas, the steady growth in standard of living and more recently, improved GO train access connecting to Toronto.
In terms of affordability, as Hamilton’s prices continue to rise, it is slowly slipping down the charts as an affordable real estate destination within Ontario. The city ranked 10th out of the 16 Canadian cities featured within the RE/MAX 2020 Housing Affordability Report. Despite this ranking, comparative to other markets within the GTA, Hamilton continues to serve as an attractive, affordable option for homebuyers looking to settle close to Toronto.
|Average Home Price:
Source: CREA, February 2020
The markets of Crown Point, Homeside and Vincent were named the most affordable neighbourhoods to purchase a home within Hamilton and for this reason, it is likely that these areas will be a focal point as the average price level within the city continues to rise.
With dwindling supply in Hamilton, this is pushing more hopeful homebuyers into the Niagara and St. Catharines regions, which lack easy accessibility to Toronto offer substantially lower home prices compared to Hamilton.
Neighbouring Burlington is currently going into its second year of a development freeze which came into effect in February of 2019. This has stalled development within downtown Burlington and around the Burlington GO station; two markets in high demand within this region. This constraint on supply is allowing prices to creep upwards as demand continues to build. With the bylaw extended beyond the March 5, 2020 deadline, there is little certainty as to when this pressure will be released.
Impact of COVID-19 on Canadian Real Estate
As the fear surrounding the spread of COVID-19 escalated over the month of March and in April, there have been significant changes to the way in which people interact and do business. The real estate industry, deemed an essential service, has continued to operate in the midst of this public health crisis, albeit with creative adjustments to ensure the safety of Realtors and their clients.
With the cancellation of open houses, real estate agents are making use of alternative methods to showcase their listed properties. Virtual 360-degree interactive tours and video-walk throughs are becoming a standard fixture on MLS, allowing buyers to have a more detailed view of the property before requesting a visit. When in-person viewings are required, agents are following recommended protocols including showing vacant properties, limiting the number of attendees, and providing masks, gloves and hand sanitizer. Virtual deals are happening with increasing frequency.
The Bank of Canada responded to the virus outbreak with a series of interest rate cuts throughout the month of March. Intended to reinvigorate the market after some COVID-19 related losses, the rate now sits at a very low 0.25%. The big banks followed suit, cutting their prime rates to make it considerably easier for prospective buyers to not only secure a variable rate mortgage, but also afford a home that may have been just out of their budget before the crisis.
What does this mean for the Hamilton housing market?
There remains a good deal of optimism in terms of the resiliency of the Hamilton market, based on how it has fared during past economic downturns. During the 2008 financial crisis, home prices and sales volume rose within Hamilton. The outcome was similar during the 2003 SARS public health crisis; the market remained strong, and there is little evidence that there was any impact on local real estate during the outbreak period.
At present, it is challenging to predict anything with certainty. So much remains unknown about the duration of the virus protection measures, and the extent of the impact on the national and local economies.
However, this too shall pass. Isolation measures and business closures are only temporary constraints until the spread of the virus has been contained. In the wake of coronavirus, employment levels should slowly start to rebound, and communities will re-emerge from their homes, into the now eerily vacant sidewalks, parks and schools. Many will take advantage of the temptingly low interest rates, helping demand flow back into the local market. Even if demand does not rebound to pre-crisis levels, due to Hamilton’s (and Burlington’s) low housing inventory, it is likely that the current trends of creeping prices and healthy demand will prevail.