Hamilton housing prices to ease more than the Canadian average

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Published September 28, 2022 at 2:18 pm

Rising interest rates and relatively high inflation will likely further cool the overheated housing market in Hamilton, says a new prospectus from a national real estate firm.

RE/MAX’s 2022 Fall Canadian Housing Market Outlook Report, published Wednesday, suggests there will be a 2.2-per-cent decline in the average residential sales price nationally through the end of the year. But a 4-per-cent decline is anticipated in Hamilton, where rising prices have contributed to a decline in total sales so far in ’22. Unit sales are projected to drop by 3 per cent.

Nationally, 23 out of 30 markets that RE/MAX studies are expected to see a decline.

Hamilton, per the report, had a 28.6-per-cent decline in the number of sales through Aug. 31 (4,516 vis-à-vis 6,328 in the first eight months of ’21). The average sales price of $919,898 was 18.6% higher than the $775,742 for the same span in ’21.

The decline unit sales is not as large as neighbouring Niagara Region’s 36.7-per-cent drop, which is the third-largest of 30 major markets nationwide.

“Many regions are experiencing softer sales activity given recent interest rate hikes,” RE/MAX Canada president Christopher Alexander stated on Wednesday. “This provides some reprieve from the unprecedented demand and unsustainable price increases we’ve seen across Canada through 2021 and in early 2022… However, the current lull in the market is only temporary. Until housing supply increases, these ‘boom’ and ‘bust’ cycles will likely be a recurring event.”

In comparison to Hamilton, neighbouring Burlington, Ont., has had a higher average price increase of 21.5%. Its sale price and unit sales estimates are also expected to have slightly steeped drop (5.0 and 4.0 per cent respectively).

Hamilton, by any credible measure, has high housing costs relative to average income levels. Ratehub.ca said last week that a family would have to earn $167,500 annually to afford a house in Hamilton. That was about 6 per cent lower than it was at the end of June.

The Smart Prosperity Institute also forecast in mid-August that Hamilton will need a net increase of 52,400 new housing units by 2031 to help abate a provincewide housing shortage.

The City of Hamilton, over the last council term, has approved the building of some 20,000 residential units. Ward 8 Coun. John-Paul Danko suggested the city is on pace to hit that 2031 target, pending the building and development industries completing work that has received approvals.

The outlook from RE/MAX noted that rising interest rates are contributing to Canadians being more bearish than bullish on buying new homes. The firm’s report says 44 per cent of Canadians to temporarily shelf their home-buying aspirations. Recession worries have impelled 41 per cent of Canadians to wait to purchase/sell their home in fall 2022.

“We’re confident that as economic conditions improve by mid-2023, activity will resume,” RE/MAX Canada executive vice-president Elton Ash says.

“Timing the market for short-term investment is extremely difficult and rarely successful. But as a long-term investment, the Canadian housing market continues to yield solid returns.”

The full report is available at blog.remax.ca.

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