Housing Slowdown Predicted for Hamilton: Prices Forecast to Increase 7%
At Robert Floris’ office in Hamilton Ontario, we really hope that the article below is accurate. Currently, our Hamilton real estate prices have been soaring due to, mainly, a lack of supply of listings. We hope that the buying process will be more tranquil in the near future.
Hamilton’s housing market is heading for a two-year downturn, according to the latest statistics from the Canada Mortgage and Housing Corporation.
In its spring outlook report, the agency predicts housing starts and resales will dip in the region this year and next. Prices, however, will show a comfortable increase.
CMHC’s second quarter outlook report, released Monday, says builders are scaling back their activity in order to manage a growing inventory of completed but unsold new homes. Sales of existing houses will slow this year and next, but remain above the 10-year average.
In a news release, CMHC regional analyst Abdul Kargbo said the slowdown he predicts won’t be broadly based — stronger activity is expected in east and central Hamilton and in Dundas, Waterdown and Grimsby while Flamborough, Ancaster and Burlington will see demand cool slightly, especially in 2016 when mortgage rates are expected to drift higher.
CMHC predicts housing starts in the Hamilton-Burlington-Grimsby area will fall from 2,832 in 2014 to 2,660 this year and to 2,600 next year. Sales of existing homes are expected to dip from 14,324 last year to 13,400 next year.
Average prices during the same period will rise just over 7 per cent to $435,000.
The CMHC predictions ring true for front-line realtors Conrad Zurini of Re/Max Escarpment, and Judy Marsales of Judy Marsales Real Estate.
Zurini said his agents are booking 10,000 appointments a month, a level of activity “that shows me there’s still a lot of demand in our market.”
While he agrees with the overall CMHC trend, Zurini said his own prediction for price increases is lower — maybe 6 per cent this year.
“We are looking at tempering people’s expectations a little,” he said. “Despite that, we still had an April that we never thought was imaginable.”
Zurini and Marsales agree rising prices in Hamilton are a response to lack of supply, not soaring demand for homes.
“It isn’t a tsunami of demand that’s driving prices here, it’s a lack of supply,” Marsales said.
Time may solve some of that problem, she added, as more people decide the current hot market may be the time to sell.
“Our phones are starting to ring with people looking to sell,” she said.
“We just don’t have enough product on the market to meet the demand that’s out there,” Zurini added.
The predicted slowdown in Hamilton partly matches the outlook for the rest of Ontario where CMHC is calling for increased housing activity for the rest of this year, followed by a slowing in 2016.
“An improving economy will be more supportive of the Ontario housing market in 2015 than it has been in the recent past,” CMHC economist Ted Tsiakopoulos said in a news release. “However, as mortgage carrying costs continue to grow, particularly for single family homes, demand will increasingly shift to more affordable housing.”
Tsiakopoulos predicted housing starts in Ontario will range between 56,800 and 64,200 this year, dipping to between 54,500 and 63,600 next year.
Sales of existing homes across the province will gradually lead the market higher with a forecast ranging between 192,800 to 218,000 units this year before slowing to between 182,900 and 213,400 units in 2016.
The CMHC report generally mirrors a recent outlook produced by the Conference Board of Canada. That study called for sales of 15,672 homes this year, an increase of 13.7 per cent over 2014. Listings, however, are expected to increase only 0.1 per cent to 20,520. Average prices are projected to rise eight per cent to $431,188.
Robert Floris is an independent mortgage broker at Mortgage Architects in Hamilton Ontario.