Hamilton Housing, the Next 24 Months Will Say a Lot
I recently read an article that Toronto is becoming the New York City of the North. What does this mean? That both renting and home ownership is becoming expensive for even high-income residents.
Why? The government basically pushed for higher density homes, which are basically condos. The builders have come up with smaller condos which are at best suited for smaller stays. This has contributed to poor choices and lack of mobility for GTA residents.
Even renters are having a tough time. If you are a wage earner in the bottom 40%, your wages contribute to almost half of your rent. Without an economic shock, renters will continue to struggle.
Why does this concern me? Well, the average new priced home in Toronto sold for $705,000, the new average condo price is $454,000. Hamilton is a relatively short drive from Toronto and having clients seek options. Try buying a home in Burlington, Ontario, you may get chest pains. Hamilton new construction prices can be scary. A recent client of mine purchased a luxury style bungalow in Ancaster for close to $900,000.
Land in central Hamilton Mountain is becoming expensive. As of today, the price for a serviced lot in Hamilton Mountain goes for $4500 per front foot. So for example, a forty foot lot will go for $180,000.
Mortgage rates are hitting bottom, they are as cheap as they ever have been. These will be interesting times, if you cannot afford a home now, you may never own a home unless there is a housing bubble. With that said, if you don’t own now, then you may be pushed into renting for not only affordability reasons but also for demographic reasons.
There is an affordability index which gives you a figure to your city affordability. For example, in Toronto it takes 6.5 times the average income to buy a house. Vancouver, B.C. which is rated the second most expensive city to live has an index of 10.6. Hamilton Ontario is the fifth least affordable city with a rating of 5.0. According to the experts a median index of 5.1 or higher is severely unaffordable, 4.1 to 5 is seriously unaffordable.
So there you have it, something has to give. With Hamilton’s price index of 5.0, and with rates as low as they can get. Our city will have interesting times over the next 24 months. Luckily for us in Hamilton, a great deal of purchasers come from East of us and they do have the income to qualify for our quality real estate.
Robert Floris is an independent mortgage broker with Mortgage Architects, in Hamilton Ontario.