The Realtor’s Association of Hamilton-Burlington has released it’s Hamilton Real Estate market stats for January 2018. It’s the first month of the 2018 real estate market and the first month since OFFSI’s new mortgage rules have taken effect. Those rules included a general tightening of lending requirements, but the most significant of those rules was the stress test, which forces all buyers to be qualified at a rate approximately 2 percent higher than the rate that they’re given at the bank, effectively decreasing their budgets by 20 percent.
This is uncharted territory. Rules like these have never been put into effect, so there have been many different viewpoints and opinions as to how this would affect the market. CMHC has come out with their latest announcements and pegs home values to continue to grow over the next three years, despite the new mortgage rules that have taken effect. Of course, all markets are different. Some may be more negatively impacted and some may actually benefit from the rule tightening, believe it or not.
Regardless, it was a record January for our team. We personally sold more homes this January than any January in the last 10 years. Activity seemed to be very brisk. We did seem to encounter quite a few competitive offer situations in which there was more than one bid on a property our clients were looking to purchase, which was surprising. We expected activity to soften up as January is typically one of the slowest months of the year and because of the new rules coming into effect. We thought it might take some time for the market to absorb the new mortgage rules.
Listings in Hamilton Up 0.7 Percent
Looking at Hamilton’s stats, listings were up only 0.7 percent. That’s a much lower number than what we’ve seen during the previous months. Back in the fall, we saw a massive increase in listings, with each subsequent month showing fewer homes coming to the market. At this point, we are fairly stable. Last year, 606 homes were on the market — this year, 610 homes. So it looks like inventory is falling back into line. If this keeps up, inventory will continue to be eaten up, and we may start to see average sale prices pick-up with homes selling quicker.
Sales were down 34 percent, which looks like a fairly drastic number. But when comparing January 2018 to January 2017, this number does not come as much of a surprise. Last January was the busiest January we’ve ever seen in Hamilton. Comparing this January to last January, the difference is going to be very stark.
It was expected that sales would be slower in January 2018 vs. January 2017. The slowdown is not something that anyone should be concerned about. We had a fairly good January in 2018, but it obviously doesn’t compare to the abnormal January we experienced last year. So while some may interpret this as negative, it’s just comparing apples and oranges.
Average Sales Prices Up 6%
Average sales prices were up 6 percent. This is a very interesting number given that last January was probably one of the hottest months we’ve seen in Hamilton for real estate. Average sales prices were appreciating very quickly this time last year, so for us to be higher really shows that the Hamilton market — despite some bumps over the course of the last year — has continued to move forward, and overall home prices continue to be elevated and increasing.
Average sales prices in Burlington are actually down 7.2 percent. Going a bit further to Toronto, normally the city to follow, Toronto’s home prices are down on average over 4 percent. So again, Hamilton is showing continued strength, almost a year now since the Fair Housing Plan was released. We have repeatedly remained positive as far as average sales prices go, and we continue to outshine almost any other community in the Greater Golden Horseshoe.
Days on Market at 45
Days on the market last January were 28. This year, homes spent an average of 45 days on market. This is still a fairly good number. Historically, it’s great. But again, that is 67.7 percent longer than just a year ago. Looking at that number again, I would stress that it isn’t a negative thing. It’s simply a result of comparing this January to the hottest January we’ve ever had in Hamilton real estate.
The numbers may look drastic or negative, and the news media may try to depict it as a market in decline but that is just not the case. Real estate board stats are always based on year-over-year numbers, on a monthly basis. Comparing current stats to the the busiest year ever — will produce drastically different numbers that can be perceived as negative. Putting it all into perspective, 45 days is a great number.
End of month inventory is up 57.8 percent. Last year during January, we had 618 homes left on the market; this year we have 975. To see a 57.8 percent increase is not bad. Inventory remains very balanced. We are not in a buyer’s market. Comparing it to last January, a month in which we had some of the lowest inventory we’ve ever experienced, should not be interpreted negatively.
That’s a quick update on the numbers coming out of Hamilton for January 2018. Hamilton is again proving its resilience and showing the strengths that it has to offer. The fundamentals of our market are stronger than ever. We are beating the trends, and our values continue forward as many other communities across the province have either stalled or are actually seeing a decline.
That’s good news for the Hamilton market and it appears as though things are moving forward better than expected given the new mortgage rules that have come into place. We’ll have to see how things play out over the course of the next few months as mortgage pre-approvals that were locked in at the tail end of 2017 start to expire.