A senior analyst with Canada’s housing agency says home buyers in Hamilton will continue to see prices go up over the next year leading to a dampening of sales activity in the region.
Anthony Passarelli, who tracks Hamilton, Halton and Peel Regions for the Canada Mortgage and Housing Corp. (CHMC), says he expects to see fewer home sales across Canada and that will diminish some price growth seen again at record levels over the past few years.
“We don’t necessarily think that prices will fall, but the growth will slow down, and that’s a lot to do with the lack of supply that exists in the market currently relative to demand,” Passarelli told 900 CHML’s Good Morning Hamilton.
The latest trends appear in the CHMC’s latest Housing Market Outlook Report which generally predicts sales and new home construction in 2023 and 2024 will remain above five and 10-year averages with any significant price growth to be endured by those looking in the largest municipalities, like Vancouver, Toronto, and Montreal.
Homeownership affordability is expected to continue to decline as price increases will still outpace the average Canadian’s income growth and ultimately affect rental affordability, which is expected to also wane.
Passarelli says Hamilton’s housing issues revolve around the lack of product that is available for sale, which he expects will not slow increasing prices with demand still high for homes in the city.
The CHMC forecast suggests migration to Hamilton from Toronto will decline somewhat compared with 2020-2021 due to a “shrinking price gap” between single-detached homes in both cities.
However, that’s not likely to relax current market pressure with Hamilton continuing to experience inventory issues.
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“The conditions are so extreme right now in terms of the lack of inventory for sale that you could still see prices grow, albeit at a lower rate over the next couple of years,” Passarelli said.
He says changes in mortgage rates are likely to deter prospective buyers from renting or living at home with their parents since trending shows they are less likely to commit to a sale with high borrowing rates.
Homebuyers in the Hamilton-Burlington area are still experiencing a seller’s market fuelled by high demand and low supply, according to the latest numbers from the Realtors Association of Hamilton-Burlington.
The regional residential average sale price did remain over the $1,000,000 mark despite a 2.7 per cent drop between February and March.
A “balanced” resale market in 2023-2024 is expected with a consumer shift toward less expensive homes amid demand for high-priced homes “softening” due to increasing costs.
“So that means, for example, condo apartments will likely outperform,” Passarelli said.
“In certain regions of Hamilton, such as the centre and east areas, which are a little less expensive, they will likely outperform over the next couple of years.”
An elevation of multi-unit housing starts in the city is also expected with builders responding to low rental vacancy rates.
With Hamilton councillors discouraging expansion of the urban boundary and favouring infill and intensification to accommodate future population growth, the CHMC expects new and increased activity with the city’s apartments and townhomes.
Passarelli projects few of the new builds will be single, detached homes and that new apartments and townhomes will be concentrated in the central area around Hamilton’s forthcoming LRT.
“There’s a very low supply of townhomes and apartments for sale in the resale market, and those are homes that are a little bit more affordable to purchase,” Passarelli said.
“Building more of those homes makes sense from that perspective.”
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