November 2009

• Average price is expected to rise approximately 4% (we have been roughly 5% the past few years and that is expected to continue on the long term)

• Interest rates are not expected to go lower but slowly creep up probably more the end of next year

• There could be a bit of a push on Buyers to buy NEW homes before HST kicks in next year July 1(less so with resale homes)

• I have been saying that we have been in a strong Seller’s market since early spring because of interest rates and very little inventory for Buyer’s to choose from, however; I found it very interesting to see that we are still running affordability levels close to 2004 so Buyers are doing well also and I think most realize it and are still looking for homes. 

• Babyboomer sales are picking up and will increase over the next few years.

Hamilton’s housing market will heat up next year as the area’s economy shakes off the last effects of the recession.

That’s the verdict economists and analysts with the Canada Mortgage and Housing Corporation delivered to the agency’s annual Hamilton Housing Outlook conference yesterday.

Sarah Fong, senior CMHC analyst for the Hamilton market, said low interest rates and higher confidence about job security will bring people into the housing market next year, driving new home starts up 13 per cent, volumes of resale homes up 3 per cent and prices up about 4 per cent.

The average resale price of a Hamilton home next year will top $300,000.

Prices this year are expected to average almost $290,000.

The 2008 average was $281,000.

“Housing prices have been rising an average of about 5 per cent a year in Hamilton,” Fong told an audience of realtors, builders and others.

“That’s twice the rate of inflation, and we expect that rate to continue for the longer term.”

Hamilton’s improved housing outlook is expected to match performance in the rest of Ontario as consumers finally release their pent-up demand for homes.

“There are clear signs that the worst of the global economic downturn is behind us,” said CMHC Ontario economist Ted Tsiakopoulos.

“Consumers have started to spend again, but they are spending very cautiously.”

During the years of economic trouble, Tsiakopoulos said, housing starts have lagged behind the rate at which new households were formed. That kept prices for the existing stock up while creating a stockpile of demand that won’t be vented until the real recovery begins.

“The conditions for recovery are there, but we need a lot of things to fall into place first,” he said.

At the top of that list is a real increase in consumer spending in Ontario. With American consumers still whittling down their household debt and American businesses needing fewer products from Canada, “the heavy lifting of recovery is going to have to be done by our consumers,” Tsiakopoulos said.

Interest rates are also a critical factor and Tsiakopoulos predicted no serious increases until later next year.

“There’s no reason to believe interest rates are going to go lower,” he said.

“They’re more likely to start creeping up.”

Another factor that’s expected to have a major impact on the local market is the changing age profile of the population.

Baby boomers are reaching the age where they’re selling off the homes where they raised children and looking for adult lifestyle condos and townhouses.

That move is already being seen in housing starts numbers. Between 1977 and 2005, 58 per cent of houses started in this area were single detached homes and 24 per cent were townhouses.

Between 2006 and this year, the portion of single detached houses has fallen to 53 per cent and the townhouse piece of the pie has grown to 31 per cent.

sarnold@thespec.com

905-526-3496

INCOME REQUIRED IN 2009 TO BE A FIRST-TIME HOMEBUYER IN:

Central Hamilton $30,000

Mountain $40,000

Dundas $58,000

Flamborough $80,000

Ancaster $70,000

Glanbrook $50,000

Stoney Creek $45,000

Burlington $60,000

HOUSING INDUSTRY STATISTICS FROM THE 2009 CMHC HAMILTON HOUSING OUTLOOK CONFERENCE

YEAR 2008 2009 forecast 2010 forecast

STARTS + 17 per cent - 50 per cent + 13 per cent

SALES - 13 per cent - 3 per cent + 3 per cent

PRICE + 4.4 per cent + 3.3 per cent + 4.1 per cent

JOBLESS RATE 6 per cent 8.4 per cent 7.9 per cent