The Realtors Association of Hamilton-Burlington has released their final statistics for March 2018. If you’ve read the news over the last few days, you may have read some of the doom and gloom articles regarding home values dropping and Toronto sales being the worst we’ve seen in 30 years. As we know, negativity sells headlines. Unfortunately theirs no true expert breaking this information down and giving everyone a real, overall picture of what’s happening at any given time.
Statistics are looked at on a year over year basis, which doesn’t give anyone a real sense of what’s going on. All we know is whether values are going up or down in a given month vs. the same month one year prior. Imagine being limited to checking your stock portfolio once a month and only being able to see the average price for the month vs. the same month one year prior. In order to properly assess a market we should have access to daily, weekly, monthly and yearly market data. Because we only have access to this limited information, reporting is focused on this one year trajectory and limits proper analysis.
It’s been one year now since the fair-housing plan was released by the provincial government. At the time, I broke down each of the new rules being put in place; none of which had any bearing on prices, provided more supply, or curbed demand. Most of it—almost all of it—was politically motivated.
What it did was scare people and cause a sudden change in the market, almost immediately after the unveiling of the plan. Since that time, the Hamilton market has proven resilient. Values here have held up much stronger than we’ve seen across almost any area of the Greater Golden Horseshoe. Hamilton has posted positive monthly average sale price growth every month since last April. At the same time, looking at cities anywhere from Burlington all the way up to Barrie, we’ve seen a large softening in average sales prices. Despite the fact that almost every community affected by the new housing rules posted negative monthly average sale price growth, since the plan was unveiled, Hamilton has remained a beacon of growth.
March is the first month Hamilton has witnessed negative average sale price growth since the housing rules were unveiled. This is not something that should cause anyone to panic. We predicted this would happen months ago, as our monthly statistics are now being compared to what were the highest months for price appreciation in Hamilton history. For the first two months of this year, we have actually been witnessing higher average sales prices than some of the busiest months we’ve ever seen, which were January and February 2017. If you go back and recall sale prices as of March 2017, prices were up almost 30%. Although Hamilton’s market has performed extremely well since the new rules were unveiled we did not expect it to outshine last March or Aprils average sale price growth.
From March 2017, our average sales prices are down 7.5%. Putting that into perspective, we are comparing our numbers for March of this year to one of the best months in the history of Hamilton for average price appreciation. To be down only 7.5% from last springs peak pricing really shows how well our market has done. If you recall my comments in the past, real estate can not be measured by one months sales activity. Hamilton home values rose exponentially by the end of 2017 despite the fact that prices ended up lower than the highs we experienced in March and April. Unfortunately the media continues to point to the fact that prices did not hold at that level throughout the year. Average sale prices fluctuate up and down throughout any given year. Some months post higher growth and some months lower. It’s where those numbers trend over time that matters. Hamilton trended positively for all of the 2017 with some months higher than others. Why we continue to compare everything to the peak of the spring market and point to anything less as a failure, is total nonsense.
Going into next month, we will likely see similar numbers; we are not likely to match the 25% or 30% gain we saw last May. Once we get into June, we should start coming out of the woods, as we will start posting positive average sales price growth again. Once this occurs the narrative in the media will shift and so will consumer sentiment.
Sales are down 37.2%, and listings are down 11.7%. Both of those numbers are likely directly connected. In the fall and summer, we saw listings explode as people got worried and started putting their homes up for sale.
As we entered the new year, we saw listings move into negative territory. With fewer homes on the market, you’ll have fewer sales. Though there are many buyers out there looking, there aren’t a ton of options available. There may be more options than we had last year, but again, supply is still relatively tight. On the one hand, you have some buyers holding off to see what will happen in the market. On the other hand, you have sellers worried—maybe now is not the right time. Because of that, you’re seeing lower sales number.
Average days on the market went from 17 last year to 26 this year. 26 days on market is historically extremely fast. Many of our listings are selling with multiple offers and over the asking price. It’s a great time to be a seller. (you don’t hear anyone reporting that) Inventory for the month is up 74.1%. This time last year, we had 640 listings; in March 2018, we had 1,114 listings. Inventory levels in March 2017 were abnormally low and not something you should expect to see in a more stable market.
All of what we’re seeing can be explained and is relative to March of last year. All in all, the market is doing very well here in Hamilton. The fundamentals here in the market are strong. The market is healthy. There are many buyers out looking. Really, there is a lack of good listing inventory at the moment. Sellers have been holding off, thinking it’s not a good time to sell. In reality, the last two months have probably been the best time to sell since last spring. The market has really picked up. Again, multiple offers are taking place. Homes are selling quickly. All in all, things are good for sellers that have priced their homes correctly and have a robust marketing plan providing the necessary level of exposure.
The spring rush will likely come late this year. Pent up listing inventory should start hitting the market as the narrative in the media changes and the weather improves. More supply means more options for buyers, which can lead to less urgency as buyers have more to choose from. When that happens, you’re likely to see a softer market, with fewer offers and lower sale prices. If you can get your home on the market now before the big rush, you’re going to see increased activity and higher prices.
Buyers, Hamilton homes values are going nowhere but up. Hamilton posted incredible average sale price growth last year and will post positive sale price growth in 2018. Government interventions, fear campaigns and mortgage rule changes have not brought the affordability you seek. What this has done is caused a balancing of supply and demand which slowed the rate of the growth. Nows your chance to jump into the market. It amazes me that buyers are afraid to buy when the market is rapidly increasing and afraid to buy when things slow down. After 20 years of decline/stagnation Hamilton is finally turning a corner. With it’s incredible affordability relative to the GTA, 2 GO stations on the way, Light Rail Transit, Pier 8/9, and countless other amazing developments in the pipeline, Hamilton has nowhere to go but up.
Going into the second half of the year, we feel the effects of the new mortgage rules will be fully absorbed. Average sale prices and sales numbers will begin to be reported based on stable months following the unveiling of the Fair Housing Plan last year, which will change the narrative in the media. We expect less real estate drama for the second half of 2018 as the market regains momentum and continues forward.