Being in the mortgage industry in Hamilton for the past 25 years and living it in your bones you get a good feel of what is happening in the local mortgage and real estate markets. Today I will try to predict what will occur for next year. This is what I do all the time. I want to stay one step ahead of everyone. Have we been perfect, absolutely not! I did not see the explosion of Hamilton real estate values caused by continuous low interest mortgage rates and the push from the GTA. But overall we have done well with our best call sticking with variable rates in the mortgage market. So let’s look at the crystal ball and predict for 2016.

1. INTEREST RATES- Let’s face it, our economy is struggling. Our Bank of Canada has tried to lower the interest rates to get Canadians to start investing and to continue purchasing. It has certainly worked as the housing market has taken off with the cheap money (as rates decline, we can afford more). Unfortunately it may have worked to well. Canadians have more debt than ever before including mortgages and other debt instruments. Imagine what a couple of interest rate hikes will do.
PREDICTION-With the economy struggling, mortgage rates will remain low in 2016.

2. HOUSE VALUES-Hamilton house prices have jumped by close to 17% from last year. In fact Hamilton, Ontario has been red-hot for sales in the last two to three years. CMHC has come out with a report this week that the hammer is still undervalued. While I understand their premise, I don’t really agree. CMHC and I believe these steel town homes provide good value, there will be outside factors which will have a serious effect on prices. These factors being the economy and the final push from GTA buyers.
PREDICTION-House prices will peak and level off in 2016.

3. ECONOMY-One of my strongest beliefs is that house prices will crest and there will be a recession in 2016. Low commodity prices are beginning to ripple cracks throughout the country. An example would be the low price of oil. Layoffs are starting to mount in Alberta. These low prices have affected Hamilton with the dramatic reduction in the production of steel. Companies in Canada are reporting lower profits which mean cost cutting will begin. As well in Ontario, Premier Wynne has broken a campaign promise and is looking at municipalities charging a new land transfer tax. I realize these governments are cash strapped but homeowners will take it on the chin with more expensive housing at the wrong time.
PREDICTION-Our economy will go into a recession and cool off the housing market.

4. MORTGAGE BROKERS AND REAL ESTATE AGENTS-With the boom of housing in Canada and including Hamilton there has been a proliferation of mortgage agent and realtors. In fact a famous diamond dealer now advertises for second and third mortgages. We now have hair dressers, mechanics and other part time workers being involved in client’s largest purchase.
PREDICTION-Thankfully, if the economy turns so will the part timers into a new career.

5. AFFORDABLE HOUSING-Unfortunately one of the sad things to come out of the housing boom is the gentrification of new neighbours. Don’t get me wrong, this has been wonderful for the updating of our city core. The affect is that affordable housing for the poor is very strained. With the election of the Liberals at the Federal Level, they will supply funds and tax incentives for this neglected area.
PREDICTION-With the economy slow and the Federal government trying to stimulate growth, the budget will include incentives for builders to provide affordable housing.

Well there you have it, let me be the first to wish everyone a prosperous 2016.