Hamilton Property Market — Demand Evaporates — Oct 2023
The Hamilton property market shows signs of cooling as we move into October, with prices declining and sales volumes slowing down.
According to the local real estate board, the benchmark house price stalled in April 2023, and a downward price trend has begun to emerge in the past two months.
House Purchase-Sales activity peaked in May this year when the more active Spring market typically continues into June and July. Similar to the London market, August purchases were lower than in the previous three years.
As a result, listings are sitting on the market longer, and at the current rate of purchases, it would take roughly three months to clear out all the active listings.
Condo apartment prices have been more buoyant than house prices. Purchase and inventory conditions are similar to those for houses. However, technically, there is more supply in the apartment market. Hamilton has approximately four months of apartment supply, while Burlington has two months of supply.
Why is home price growth stalling in Hamilton?
There are several factors contributing to the cooling of the Hamilton property market.
Mortgage Rates: Rising interest rates are making it more expensive to borrow money, which is reducing buyer demand.
Increasing Inventory: Another factor contributing to the cooling market is the accumulating number of homes for sale. While three months of supply is not high, it is much higher than the first half of 2023, when prices were rising. This supply increase gives buyers more options and reduces the heat in bidding wars.
Faltering Consumer Sentiment: Consumer sentiment tends to reinforce existing trends. It’s like an amplifier. While confidence in real estate was rising in the first half of 2023, it has now stalled. If a sustained downward price trend emerges, confidence is likely to tumble. Byers with low confidence in price appreciation often delay their purchases and compound the weakness in the market.
Reports earlier in 2023 were hopeful for a recovery after the double-digit price drops in 2022. However, the recent trends suggest that the market is cooling down again. Home sellers in Hamilton and Burlington should be prepared to negotiate.
Here are some other things to keep in mind about the Hamilton property market:
The market cooling down is broad, impacting all property types. Speculative investment appears to have shifted from Ontario to Calgary.
The rental market is still strong, with rents continuing to rise. This could be cyclical — due to potential first-time homebuyers delaying their exit from the rental market. When mortgage rates fall, and buyers re-enter the market, rents could fall sometime in late 2024 or 2025.
Overall, the Hamilton property market is showing signs of cooling down. However, it is still a seller's market, and buyers should be prepared to face competitive conditions.
