Housing in Hamilton has been soaring lately and it shows no signs of stopping.
An economist with the country’s national housing agency, Canada Mortgage Housing Corporation, has dubbed it one of the hottest real estate markets in the province of Ontario. And according to the Realtors Association of Hamilton-Burlington, the average sale price for real estate in Hamilton and Burlington climbed 8.3 per cent in 2015 compared to the previous year.
If sales statistics from the first few months of 2016 are any indication, that trend seems to be continuing.
In May, the average sale price was $478,613, an increase of more than 10% compared to May of last year.
Many observers are blaming spillover from the Greater Toronto Area—where house prices have soared out of reach for many young families and first-time buyers—for the uptick in home prices in Steeltown. The latest figures from the Toronto Real Estate Board show that the average sale prices shot up more than 15% last month, compared to the same month last year.
It’s no wonder that many would-be buyers who can’t afford a detached home in the Toronto area are looking to the Hammer as an alternative. Frequent GO Train service between the two cities makes commuting into downtown Toronto a breeze, while still allowing young professionals a shot at the white-picket-fence homeownership dream.
But Judy Marsales, the owner of a Hamilton-based real estate brokerage, says the notion that sky-high prices in the GTA are pushing would-be buyers out to Hamilton is only part of the picture, and a fairly small part, at that.
“I know the perception, in terms of rising prices, is that it’s the spillover from Toronto, and there might be a marginal amount of that,” says Marsales.
But, she adds, “it’s clear that what is really pushing price is the lack of available properties.”
In other words, climbing house prices in the Hamilton-Burlington market can be chalked up to classic supply-and-demand, says Marsales.
With a growing number of baby boomers choosing to stay in their homes instead of downsizing to condominiums as they were expected to do—a phenomenon referred to as “aging in place”—the number of properties being put up for sale has been dwindling.
Last month, for example, the number of new Hamilton real estate listings slipped nearly 18% compared to the same period last year.
That’s boosted demand, driving prices higher and causing homes to be snatched up off the market much more quickly than before.
The average number of days for a detached or semi-detached home to linger on the market before being snapped up dropped to 22 in May, down from 32 days a year ago. Condo units, meanwhile, are sold in about 25 days on average, down from 31 days in 2015.
Bidding wars have also been cropping up in some instances, though not to the same degree as in the much-hyped Toronto and Vancouver markets.
‘We’re definitely seeing multiple-offer scenarios,” says Marsales. She believes the homes most likely to attract multiple bids are beautiful heritage houses, despite the fact that many of them require some needed refreshing, and those located walking distance from attractive areas such as the waterfront and Locke Street, a popular dining destination.
Meanwhile, a revitalization of the city’s waterfront and a burgeoning health and life sciences industry has made it more attractive to young families. Marsales says she’s thrilled by the increased interest in Hamilton as a place to raise a family.
But although rising home prices can be a positive indicator about economic conditions in a city, there is a dark side, as well.
Data from TD Economics shows that the affordability of homes in Hamilton—based on a calculation that attempts to show how much of an average income is gobbled up by mortgage payments—has been eroding in recent years.
If house prices continue their red-hot streak, and incomes don’t rise in tandem, local residents could soon see themselves priced out of the market.