Real estate in central and east Hamilton still hot
CMHC assessment shows housing market ‘highly vulnerable’ but seeing improvements
HAMILTON’S CENTRAL and eastern neighbourhoods are still reaping the benefits of a hot housing market despite the city’s real estate sector having cooled off overall, a new report shows.
The Canada Mortgage and Housing Corporation’s latest quarterly assessment lists Hamilton Centre and Hamilton East as having “favoured sellers” because those areas of the city have more affordable home prices.
“Those have remained sellers’ markets,” Anthony Passarelli, a CMHC senior market analyst for Hamilton and Brantford, said during a teleconference Thursday after the housing market assessment was released.
“Because of affordability issues, people have gravitated more toward the lower-priced homes and that’s what’s ... kept them as a sellers’ market compared to, say, an area like Burlington or Ancaster, which is more expensive and demand has cooled off a bit.”
Those lower-city neighbourhoods were also highlighted in a real estate ranking this spring by Money Sense, a Canadian online personal finance and lifestyle magazine, as the best places to buy because of property value and the upward momentum in prices.
At the time of the study, local realtors said the trend had been developing in recent years. Hamilton buyers were being scared off by high
prices in the west end and the Mountain, and new changes to mortgage rules and rising interest rates made homes in central and east Hamilton even more appealing.
Overall, CMHC’s latest assessment — which is based on data until the end of March and market intelligence as of the end of June — lists Hamilton’s housing market as “highly vulnerable,” lumping the city in with others like Toronto, Vancouver and Victoria.
Overvaluation and price acceleration in these cities are the main reasons the country’s housing market has remained “highly vulnerable” for eight consecutive quarters, a news release says.
But the market in Hamilton’s census metropolitan area, which includes Burlington and Grimsby, has started to turn around, Passarelli said.
While Hamilton still has “moderate” evidence of overheating, price acceleration and overvaluation, these indicators have begun to see some improvement, he said.
“If you look at the market in the last little while, we’ve noticed the market has been more toward becoming a balanced market,” he said.
“The assessment hasn’t changed yet, but we’re tracking the improvements along the way.”
For example, the seasonally adjusted sales-to-new-listings ratio in Hamilton was 61 per cent in the first quarter of 2018, which is below the 75 per cent threshold
for an overheated market. But “moderate” evidence of overheating remains because the ratio was above the threshold in eight of the past 12 quarters, the report shows.
According to the report, the ratio decreased because of sales declining more than new listings, which was primarily due to buyers rushing to purchase a home in the last quarter of 2017 — before the mortgage stress test came into effect.
In the first quarter of 2018, new listings declined because many homeowners held off putting their house up for sale because of winter weather and the uncertainty around the impact of the tougher mortgage qualifying regulations.
For home prices, the inflationadjusted average MLS price decreased by an annualized rate of 11 per cent from the fourth quarter of 2017 to the first quarter of 2018, the report says.
As for overvaluation, home prices are still considerably higher than levels supported by housing demand fundamentals like population growth, disposable income per capita and employment.