Buying a house in Hamilton costs $300K more than it did 6 years ago, data shows - Action News
Home WebMail Sunday, November 10, 2024, 11:23 PM | Calgary | 0.4°C | Regions Advertise Login | Our platform is in maintenance mode. Some URLs may not be available. |
Hamilton

Buying a house in Hamilton costs $300K more than it did 6 years ago, data shows

Home prices have skyrocketed in the past six years and one expert says they may not drop much in the future.

Data also shows the number of homes sold in 2023 was the lowest Hamilton has seen in 25 years

A for sale sign sits in front of a home.
Hamilton home prices have soared since 2018. (Alex Lupul/CBC)

Seven years ago, Vicky Amato bought a home with her husband in Hamilton'slower city.

But now she's going through a divorce, whichforced her out of the house and now she can't afford to buy a new home in the city.

She says she doesn't make enough money to buy a home and struggles to afford rent downtown, but also hastoo much money to access support fromthe city and community services.

Amato said she will likely have no choice but to move to a more affordable city.

"I don't want to go ...who wants to leave their home and everything they know and all their friends and neighbours?" she said.

Hamilton skyline
Hamilton homes are selling for roughly $300,000 more than they were in 2018. (Bobby Hristova/CBC)

In 2018, the average sale price of a home in the city was roughly $569,000, according to Realtors Association of Hamilton-Burlington (RAHB) data. Last year, it was $885,000, which is higher than past years but lower than 2022.

"It's absolutely crazy," RAHB president Nicolas von Bredow said.

Why have home prices soared in Hamilton?

He said people coming to Hamilton from pricier places to live, like the Greater Toronto Area, increased the local demand for homes, which raised the cost of homes in the city.

"Hamilton was a diamond in the rough," von Bredowsaid.

Jim Dunn, a McMaster professor and director of theCanadian Housing Evidence Collaborativeagrees, saying demand in the city became "supercharged" over the past few years.

"Buying a home isprobably not going to be possible for a lot of people," he said.

He said low interest rates before and early into the pandemicmade it cheaper to borrow money and people who already built up equity in their home could afford to buy property in a market like Hamilton and do so well above asking price.

He also said while immigration is good and necessary, increased immigration levels in recent yearsalsoadded more competition to the housing market.

"There's been verylittle attention tomanaging [immigration] in concert with our housing supply," Dunn said.

Why are home sales laggingin Hamilton?

As sale prices have grown, so have home listings butRAHB data shows the number of homes sold has been falling since 2021.

In fact, the number of homes sold in 2023 was the lowest Hamilton has seen in 25 years.

Dunn said that is a sign to him of stubbornness from homeowners who saw prices peak in 2022 and are trying to sell homes for the same amount of money.

"People are very reluctant to come down from that sales price," he said.

He and von Bredow agreed thathigh interest rates have also discouraged people from buying and selling homes, especially since incomes haven't budged much.

Interest rates have climbed from just about one per cent in 2018 to the current rate of five per cent now.

The Bank of Canada has continued to hold its key interest rate at five per cent since July and signalled it has begun considering the timeline for rate cuts.

Bank of Canada governor Tiff Macklem recently said the central bank can't solve the housing crisis with interest rates because the root cause is a supply shortage.

Dunn and von Bredow said reducinginterest rates and building more homes would improve conditions in the market but both have to happen to fix the problem.

Dunn notes home building has slowed, in part, because high interest rates have narrowedprofit margins for developers. It's led some developers to sit on properties until they become more profitable.

Amato said she wants to see more income support for middle class residents.

Advice for people thinking of buying a home

Dunn and von Bredow saypeople who are thinking about buying a home and can afford the high interest rate may want to act now.

They both say when interest rates decrease, more people will try to buy homes.

Dunn said people hoping interestrates will drop to pre-pandemic levels shouldn't keep their hopes up. He expects interest rates to stay above four per cent moving forward.

Dunn also doesn't think home prices will drop much.

"I think this phenomenon of people believing their house is actually worth the peak of what it was in 2022 is going to persist even when interest rates go down," hesaid.

With files from The Canadian Press