What a Roller Coaster Ride the Real Estate Market has been For Hamilton in 2017!

It’s been an incredible ride for buyers and sellers this year in the Hamilton-Ancaster Real Estate Market. The year started out with a bang where low interest rates combined with in-migration of buyers from the GTA and record level low inventory fueled a strong Seller’s Market. Bidding Wars were commonplace as Buyers tried desperately to get into the market. The Canadian Mortgage and Housing Corporation (CMHC) sounded the siren with fancy colour coded warning charts with Hamilton being—and continues to be—in code red or high degree of vulnerability for both price acceleration and overvaluation.

Then came along the Ontario Fair Housing Plan which included a 15% Non-Resident Speculation Tax in an attempt to cool the market. This measure worked well as we began to see a decline in sales and price acceleration in the region. In addition, since July we have had two interest rate hikes by the Bank of Canada which has further put the brakes on the market. As a final death knell to the frenzied market, the Office of the Superintendent of Financial Institutions introduced tighter Mortgage regulations that take effect Jan. 1st, 2018. Uninsured borrower’s—those with 20% or more down payment—will undergo a “stress-test” and need to qualify at the higher Bank of Canada’s 5 year conventional mortgage rate or 2% higher than the rate they have negotiated.

Due to a culmination of these factors the real estate market in Hamilton is now—thankfully—in more balanced territory. The landscape has changed significantly since the early part of the year. Buyers can now breathe a sigh of relief and actually take their time to make the most major purchase decision of their lives. This is because homes are now taking longer to sell and inventory levels are increasing. Additionally, Sellers are now having to cope with the new realities of the market—vanished are multiple offers, over-inflated selling prices and Sellers dictating the terms of when and how they would like to receive their offers.

Of course the big question on everyone’s mind—and one that I am asked most frequently—is where is the market heading in Hamilton over the next year? The short answer is of course no one knows for sure—where is that darn crystal ball when you need it?—it really depends on many variables including but not limited to job growth in the area and housing demand, interest rates, housing prices in Toronto and other economic variables. However, according to CMHC’s Housing Outlook, Fall 2017 Report, which forecasts both low and high end range possibilities, for Hamilton and area, the low end range forecast would mean average home prices would potentially be down -3.6% and number of sales would decline by -5.2%. In the high end range forecast scenario we would see average home prices increase by +1.74% and number of sales would remain roughly the same.