It’s now been over a year since the provincial government released its Fair Housing Plan — which really impacted nothing long term, but did cause a lot of panic in the markets. If you’ve been watching the news, it’s similar to what we saw last month; there’s a lot of panic, with the news media absolutely bombarding people with negative and misleading headlines.
The Toronto Real Estate Board reported its numbers a few days in advance of the Hamilton-Burlington board. Consequently, the news already had a negative focus on Toronto, which then shifted toward the Hamilton market. The Hamilton real estate market is entirely separate from Toronto; we are not related. Real estate is extremely local. So I caution people into not allowing themselves to hear the news surrounding Toronto or the other communities and to believe that it is somehow reflective of what is going on here. They are very different markets — and we have been seeing very different results since last April.
As I anticipated, we’re looking at a month that is very similar to March 2018. Our stats are compared, unfortunately, on a year-over-year basis — so when they look at April’s numbers, they’re comparing them to April of 2017. This isn’t very helpful since April was one of the two or three busiest months in the history of real estate. If you go back a year prior, to April 2017, real estate values were up over 27 percent. These are not typical numbers. These types of gains are some of the highest that have ever been seen in history.
Comparing our stats year-over-year in this way, we are down about 7.5 percent in average sales price. Thus, we are only down 7.5 percent from the absolute peak of last year’s market. These were months that were the highest increases that we’ve likely ever seen. Hamilton’s market has retained 20 percent of the value that it gained in last year’s insanely hot market. This is not bad news. Elsewhere in the Greater Golden Horseshoe, you’ll see prices down 10 percent or 15 percent — far lower.
While average sales prices on a month-to-month basis can reveal trends, you really don’t want to rely on them to draw conclusions. Average sales prices are taken from homes that have been sold and averaged out. It’s possible that in some months, more million dollar homes sold than during other months. It isn’t that the average value of homes is changing; it’s that the average type of homes sold is changing.
This is important. Since the new mortgage rules were released in January, there has been a massive downward pressure from buyers into lower-priced types of product. So the high end of the market — homes anywhere from $600,000 to $700,000 and up — has seen less activity, but not necessarily lost value. We have seen buyers purchasing more affordable product. If you have a home in the $200,000 to $500,000 range, sales are quite brisk. There’s more competition, sales are occurring faster, and prices are going up in that market. Conversely, sales may be softer in the higher-priced market.
Buyers have had to revise their budgets lower and start heading into lower-priced product. It’s not that everyone’s home values have suddenly dropped 7 percent in April compared to last year — when you factor in the new mortgage rules, buyers are simply purchasing more affordable properties.
Once we get through this month, June’s numbers and reporting will be much less difficult to paint negatively as they’ll be looking at more stable and balanced months for comparison. We will be balancing out the government intervention and everything that has resulted following it. Regardless, our market has been one of the most resilient.
Sales are down 28.6 percent. Last year we sold about 907 homes — this year it was 648. This is due to fear; people are holding back and playing things by ear. Sales are off of their peak levels, but they’re still historically fast. We have a healthy number of homes trading hands.
Listings are down 6.3 percent, which really isn’t significant. These are very similar numbers to what we were seeing last year. By this time last year, many sellers were throwing their homes on the market due to the insane levels of activity that we were experiencing. This is nothing to be alarmed about, and it may even have something to do with the weather. As the weather improves, we may see listings numbers increase.
Average days on market are now 26, whereas last year in April they were 14. The percentage change there is 85.4 percent. Though that may look negative, 14 days on the market is extremely quick — and again, if you factor in the fact that many homes were holding offers for three, five, seven days or more, homes were probably selling much faster than 14 days. Nevertheless, looking at these numbers, less than 30 days on the market is still extremely quick historically. Comparing days on market to this time last year is just not realistic. Anyone who expects that to be normal or thinks they can continue that way is probably not thinking correctly.
As far as inventory goes, we have a lot more inventory on the market since this time last year — but it’s been like that since last June when everyone threw their homes on the market fearing that something bad was happening because of the Fair Housing Plan. We’ve seen increased inventory remain on the market ever since. In April of 2017, we had some of the lowest inventory numbers ever. Right now, there are 76.6 percent more homes on the market.
All in all, this is as we forecasted, we expect a similar outcome for May. We will likely be off in terms of sales prices and sales from May of last year, but again, this is due to the fact that we are comparing these numbers to some of the best months Hamilton has ever experienced. As we move into June, the numbers will adjust, and we should be out of the woods as far as the negative narrative goes in the news and the last psychological effects of the Fair Housing Plan.
For buyers, interest rates are going up. Bank of Canada has announced it will hold rates again until its next meeting, but we expect a couple of interest rate increases this year. It’s a great time to buy. Prices remain very affordable here, lending is cheap, and the city is exploding with tons of new activity.
For sellers, homes are selling less than 30 days on average, and if you price yours right and have the right agent, your home will sell much faster. It’s a great time to list; the weather has improved, and we are just about out of the woods regarding the government interference in the market.
The market is moving well and things are good. I caution anyone who is listening to the media to reflect on what is actually being said and what the data truly supports.
