With 906 reported sales through the MLS® in August, the Realtors® Association of Hamilton-Burlington (RAHB) is reporting an 11.7% increase in sales in August over July 2022. Although numbers are up month-over-month, sales are down 24.2% over last year. There were 1,641 new listings in the area, down 8% over July 2022 and up 20% year-over-year.
Month-over-month average prices are also taking a dip. The average sales price for a residential home in the RAHB area was down 2.3% from July to $858,405. This is still slightly up year-over-year by 2%.
With a new round of interest rate increases and the busy fall market ahead of us, we should expect to see more moderation in the market with a surge in inventory. This newfound balance is an improvement for buyers, even as rising interest rates and increased carrying costs reduce purchasing power and affordability.
Wondering what the Hamilton real estate market has in store for the next year? Read our Hamilton housing trends to watch for right here.
Let’s take a closer look at what happened in the local real estate market last month:
Hamilton Market Activity
|Months of Inventory||2.5||0.7||1.7|
|Median Days on Market||21.0||9.0||12.0|
|Average Days on Market||28.0||17.2||10.8|
Burlington Market Activity
|Months of Inventory||2.0||0.7||1.4|
|Median Days on Market||19.0||8.0||11.0|
|Average Days on Market||26.4||15.2||11.2|
We keep a close eye on the local real estate market. Check out our past market report updates right here.
Hamilton sales activity was down by about 29.6% year-over-year with 537 sales in August 2022 compared to 763 in 2021. Burlington sales were also in decline, down 10.3% from 233 in 2021 to 209 in August 2022. This could suggest a return to typical summer seasonality that we see in real estate, where the summers are traditionally less busy than the spring and fall.
Although sales are down year-over-year, we are seeing an uptick in inventory. In Hamilton, new listings were up 10.9% year-over-year from 863 in August 2021 to 957 this year. Burlington new listings were up 41.7% from 254 in 2022 to 360 in August 2022.
Average days on market has gone up (more on that below), which has left more active listings available year-over-year. In Hamilton, there were 1,337 active listings last month, up 134.6% over the previous year when there were 570. Burlington saw an increase of 176% year-over-year with 425 new listings in August 2022 compared to 154 new listings in August 2021.
Months of Inventory
Months of inventory is usually used to determine the type of market we are currently experiencing. A balanced or buyer’s market will typically have about 3-4 months of inventory, while a seller’s market will have less than 1-2. In Hamilton, months of inventory in August 2022 was at 2.5, up 1.7 over 2021, when the months of inventory was 0.7. Burlington had 2 months of inventory for August, up 1.4 compared to last year’s 0.7.
Average Days on Market
As mentioned, the average days on market (ADOM) are also going up. In Hamilton, we are seeing ADOM of 28 days, up 10.8 days compared to August 2021 when it was 17.2. Burlington is seeing a similar increase of 11.2 days with 26.4 days on market recorded for August compared to 15.2 last year.
Month-over-month, average prices are dropping slightly. However, looking at the yearly trend, some prices are still up, although moderated slightly. The average price in Hamilton in August 2022 was $792,767, up 1.7% over last year. Burlington average home prices was actually down by 1.5% year-over-year, although the average price was still past the $1 million mark with $1,038,930.
In the News
The Bank of Canada announced its latest interest rate hike last week. Economists anticipated the 75 basis point increase, which brought the total Policy Rate to 3.25%. This is the fourth consecutive rate hike from the Central Bank, in an effort to tackle rising inflation. The newest hike has also sparked some discussion about further increases in the coming months as the bank assesses exactly how high rates need to be.
How will interest rate hikes and government policy impact your family? Read some of our related blogs here:
- What The Bank of Canada’s Hiked Interest Rates Mean for Canadian Home Buyers
- The 2022 Federal Budget and What it Means for Homebuyers
- Mortgages 101: The Different Types of Mortgages in Canada
The latest inflation report issued in mid-August reported that consumer price gains actually slowed last month to a 7.6% yearly pace, likely a result of a drop in gasoline prices. However, price pressures continue to build in other parts of the economy, including rents and groceries, resulting in further action needed from the Bank of Canada. BOC Governor Tiff Macklem recently said that the bank’s job won’t be done until inflation gets back to the 2% target.
A new report from the Ottawa-based Smart Property Institute recently reported that Ontario was unlikely to meet its goal of building 1.5 million new homes by 2031. The goal, originally set by Premier Doug Ford in an effort to battle the housing crisis, is already 500,000 houses behind. Issues surrounding bureaucratic bottlenecks, a lack of viable land, skilled worker shortages, and more are working against the government and most experts agree that the goal would be more achievable with 5-10 years added to the timeline.
A Look at What’s to Come
With the most recent 0.75% rate hike, and indications that further hikes are possible, the Bank of Canada is starting to get closer to “neutral” pre-pandemic levels. Many have suggested that the bank is “front-loading” hikes, and we agree. It’s our view that the BOC is nearing the end of its interest rate hiking cycle.
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Another one or two small hikes could happen in the near future, perhaps bringing the rates up to 3.5% or 4% before the end of the year. However, the bank has said it will hold rates at a higher level for as long as necessary to bring inflation down.
Our advice for sellers would be to list now before future interest rates diminish buying power and inventory increases in the fall. Although some home values are moderating, the rising interest rates are outpacing any savings and affordability is actually still shrinking. Buyers should be encouraged to enter the market as soon as possible to get ahead of interest rates and increased carrying costs.