Last week I happened to be in Raleigh, North Carolina for my daughter’s basketball tournament. The city is quite lush with the full bloom of flowers and mature trees. It did not hurt that the weather was in the low 20s as well. Quite frankly, the city was absolutely beautiful.

Naturally, I looked into the real estate market for the area. It should be noted that the Raleigh-Durham area is now regarded as one of the best ten places in America to live. The area is attracting large amounts of money with its high-tech center, medical research and three major universities. Needless to say, I’d like to see any clues that may affect the Hamilton mortgage market going forward. Both mortgage markets are vibrant with both countries enjoying low mortgage rates.

First we will review Raleigh. As most people know, the market for real estate crashed in the United States in 2009. So far in Canada, we have avoided a real estate drop. The average price for homes in Raleigh-Durham in 2011 was $229,000. So far this year, the average price is approximately $254,000. That is a healthy increase of 10.91%. This is the good news. Here is the negative news. Average incomes for the area are stagnant. What is really troubling about this is that as prices climb, median family incomes have dropped from $81,359 in 2011 to $74,615 this year. As well, as incomes drop, the average rent has gone from $860 per month to $953, again, an 11% increase. For these residents, it may get worse as the inventory of affordable housing is being reduced as land is targeted for redevelopment. Developers are building thousands of new apartment units with the expectation that they will be able to charge rents that, in some cases, are double what was once considered affordable.

Now let’s take a look at our city: Hamilton. Hamilton is currently experiencing a price acceleration boom. The GTA is realizing what great value our city represents. That, along with inexpensive mortgage rates, has helped to push Hamilton prices steadily higher in the past year. I will look into my crystal ball to help predict where we are headed with our affordability and Hamilton housing. My biggest concern is that we have not had a recession in over six years. If history helps us, it teaches us that our economy is cyclical. If an economic downturn should occur, what will happen? Well, Hamilton real estate values will take a hit in terms of value. It is my strong belief that Hamilton will not be hit as hard as other cities such as Toronto. But make no mistake…we will have lower values. That really is to be expected. My concern is for the everyday Hamiltonians. Currently, their affordability ratios to get in the housing market are in the top five in Canada. What does this mean? It means that Hamilton residents with their current incomes trying to buy Hamilton properties are in the top five in the country for buying affordable real estate. Now if this prediction becomes a reality, we will experience a similar situation that Raleigh is seeing now. The first is that there will be a shortage of affordable housing. The main reason is that as the economy tightens, the banks will be very reluctant to give out mortgages. Who will the winners be? The landlords, as this will push more people to rent while tightening supplies and increasing rents over a short amount time.

So there you have it! Keep your eyes open for these trends in the upcoming future.

Robert Floris is an independent mortgage broker with Mortgage Architects in Hamilton, Ontario.