Saturday, November 11, 2017
Real Estate Market
It’s been an incredible ride for buyers and sellers this year in the Hamilton-Ancaster Real Estate Market. The year started out with a bang where low interest rates combined with in-migration of buyers from the GTA and record level low inventory fueled a strong Seller’s Market. Bidding Wars were commonplace as Buyers tried desperately to get into the market. The Canadian Mortgage and Housing Corporation (CMHC) sounded the siren with fancy colour coded warning charts with Hamilton being—and continues to be—in code red or high degree of vulnerability for both price acceleration and overvaluation.
Then came along the Ontario Fair Housing Plan which included a 15% Non-Resident Speculation Tax in an attempt to cool the market. This measure worked well as we began to see a decline in sales and price acceleration in the region. In addition, since July we have had two interest rate hikes by the Bank of Canada which has further put the brakes on the market. As a final death knell to the frenzied market, the Office of the Superintendent of Financial Institutions introduced tighter Mortgage regulations that take effect Jan. 1st, 2018. Uninsured borrower’s—those with 20% or more down payment—will undergo a “stress-test” and need to qualify at the higher Bank of Canada’s 5 year conventional mortgage rate or 2% higher than the rate they have negotiated.
Due to a culmination of these factors the real estate market in Hamilton is now—thankfully—in more balanced territory. The landscape has changed significantly since the early part of the year. Buyers can now breathe a sigh of relief and actually take their time to make the most major purchase decision of their lives. This is because homes are now taking longer to sell and inventory levels are increasing. Additionally, Sellers are now having to cope with the new realities of the market—vanished are multiple offers, over-inflated selling prices and Sellers dictating the terms of when and how they would like to receive their offers.
Of course the big question on everyone’s mind—and one that I am asked most frequently—is where is the market heading in Hamilton over the next year? The short answer is of course no one knows for sure—where is that darn crystal ball when you need it?—it really depends on many variables including but not limited to job growth in the area and housing demand, interest rates, housing prices in Toronto and other economic variables. However, according to CMHC’s Housing Outlook, Fall 2017 Report, which forecasts both low and high end range possibilities, for Hamilton and area, the low end range forecast would mean average home prices would potentially be down -3.6% and number of sales would decline by -5.2%. In the high end range forecast scenario we would see average home prices increase by +1.74% and number of sales would remain roughly the same.
Wednesday, June 7, 2017
Real Estate Market
What a Crazy Year 2017 has been so far. Rapid Price Acceleration, Heated Bidding Wars, Tight Inventory Levels, the “GTA Effect”, and Buyer Speculation fueled a very “frothy” market in Ancaster. Buyers were exhibiting what Alan Greenspan described as “Irrational Exuberance” bidding home prices beyond levels supported by economic fundamentals. Well it looks like the “buyer frenzy” may finally be over as the Ancaster Real Estate Market moves into more balanced territory. In May, inventory levels started to flood the market giving buyers some reprieve from the chaos with more time and choice.
Increased inventory levels are possibly due to Seller’s looking to take advantage of the price increases and cash out as concerns over what effect the Ontario governments new housing measures, including a 15% non-resident speculation tax to be imposed on buyers in the Great Golden Horseshoe area, may have on the market. In the Greater Toronto area, it appears these measures have already cooled the red hot housing market where the average sale price was down 6.2% in May 2017 from the previous month and the number of sales was down 12 % during that period however overall prices are still up 15% since last May according to TREB statistics.
Keep in mind that this data can be somewhat misleading because of the many variables in average sale price from month-to-month so a short term change does not necessarily indicate a long term trend. In Ancaster, for example, the monthly average sale price was $841,736 in April 2017 and $797,167 in May 2017 which is a drop of 5.2%. However, when comparing year-to-date sales from the end of December 2016 to year-to-date sales to the end of May 2017 the average sale price in Ancaster has actually increased 20.0% overall since the beginning of the year. Further, when comparing the year-to-date average sale price from May 2016 to May 2017 Ancaster has seen a staggering 29% price gain according to Real Estate Association Hamilton Burlington RAHB MLS Statistics.
So where is the market heading now? Of course it’s difficult to predict with any certainty where average home prices are heading in the long term. Will there be a correction in home prices? My own personal opinion is that price appreciation—growth—will stagnate in the short to medium term, and there is evidence that this is already happening, with the possibility of a slight correction. However, even if there is a slight pricing correction the overall net gain in values since last year will likely remain quite positive.
Sunday, December 4, 2016
Ancaster—like other districts in Hamilton—has experienced a significant increase in home values recently with average sale prices up a staggering 16.9% year-to-date. Also, as of November 2016 year-to-date, homes selling for over a million dollars in Ancaster have almost doubled year-over-year. Ancaster remains one of the most desirable and sought after communities with magnificent conservation areas, hiking trails, numerous amenities and convenient access to major highways. Despite being one of the more expensive areas in the Hamilton CMA you still get incredible bang for your buck when compared with Toronto and the GTA.
So where in Ancaster are most of these million dollar sales taking place? Nearly a third were in the Oakhill—Clearview Heights Neighbourhood in 2015 with the remainder being fairly evenly distributed throughout Ancaster. In 2016 Oakhill-Clearview Heights remained in the number one position with 27% but two other neighbourhoods emerged as contenders for a good part of the market share. These neighbourhoods included the Meadowlands with 20% and Nakoma-Greenside Acres—Perth Park Neighbourhood with 15% of the million dollar plus sales. It seems buyers in this price range—based on location—prefer newly constructed homes in more mature neighbourhoods. Both Oakhill-Clearview Heights and Nakoma-Greenside Acres-Perth Park are mature neighbourhoods. Also, the majority of the sales occurring here were of newly constructed in-fill development. In-fill development—the tearing down older homes to build new ones—has really gained traction in these neighbourhoods over the past few years. A trend that is likely to continue as we are now beginning to see in-fill development in other neighbourhoods throughout Ancaster. In the Meadowlands the typical million dollar plus sale was of large i.e. 3000+ square foot newer construction homes. Perhaps buyers drawn to this area preferred the newer subdivision with its close proximity to nearby amenities including shopping, public transportation and highway access.
As of December 1st 2016 there were 79 detached homes for sale in Ancaster and of these 46—more than half—were listed for over a million dollars. It will be interesting to see how many million dollar plus home sales there are over in Ancaster over the next year and in what neighbourhoods.
Source: Realtors Association of Hamilton Burlington (RAHB) Statistical MLS Information 2015 & 2016.
Saturday, November 12, 2016
Real Estate Market
By now you are likely familiar with the Government of Canada’s most recent intervention in the housing market through new mortgage lending rules effective as of October 17th, 2016. According to a Ministry of Finance (MOF) backgrounder 2016, these measures were taken in an effort to ensure a strong and stable housing market and prevent rapidly growing household debt and lack of affordability in some major cities including Vancouver and Toronto.
The mortgage rules will require “that lenders stress test a borrower’s ability to make their payments at a higher interest rate” and that this will apply to “all insured mortgages”. (MOF, 2016). Typically insured mortgages are those that are high-ratio (less than 20% down payment) but these could also include low-ratio (more than 20% down payment) insured mortgages as well.
How will these new lending rules impact our Local Hamilton Real Estate Market? Interestingly, the new lending rules may have a potential upside on Hamilton’s Housing Market.
1. Continued Strong Demand for Housing in Hamilton—as first time home buyers are priced out of more expensive markets in the GTA including Toronto we likely see a continued intra-provincial migration of buyers to the Hamilton region. According to a Canadian Mortgage and Housing Corporation (CMHC) Market Outlook Report Fall 2016, “about a third of first-time buyers are coming from out-of-town”. As chief CREA economist Gregory Clump states “First-time home buyers, particularly in housing markets with a lack of affordable inventory of single-family homes, may be priced out of the market by the new regulations”.
2. Increase in Home Values—Appreciation—an increase in demand in our area could continue fuel price growth particularly if inventory levels remain low. “The number of new listings is anticipated to remain at a historically low level, holding the Sales-to-New Listings Ratio (SNLR) in the range of 68 to 75 per cent during the forecast period. In line with strong sellers’ market conditions, the average existing home price in the Hamilton CMA will be in the $456,000 to $504,000 range in 2016, $479,000 to $551,000 range in 2017 and $493,200 to $602,800 range in 2018” (CMHC, 2016).
3. An Increase in Demand for Rental Properties—According to CMHC, 2016 “from 5 to 10% of all prospective home buyers could be affected during the first year of implementation” of the new housing rules. They (buyers) “may delay their purchase in order to save for additional funds”. In addition, some first time buyers may be removed from the market altogether as a result of the new rules. Consequently, real estate investors may see increased demand for their rental properties as a result of a projected decreased vacancy rate.
Monday, May 16, 2016
You may think that in a hot real estate market that selling your home privately or through a low cost/service brokerage that merely lists your home on the MLS would be easy—however, here are some compelling reasons why you should hire a full service Realtor®.
- Pricing Your Home—when the market is hot, prices are dynamic and ever changing. A realtor® can provide valuable inside information on current inventory levels, recent comparable sales and provide forecasts on where the prices are heading.
- Offer Strategy—in a Seller's Market many real estate agents employ a “no offers until” strategy whereby they postpone offers until a certain date. The goal is to create maximum interest and exposure on your home and try to generate multiple offers. This strategy would be difficult selling privately—think about it most sellers have never dealt with one offer let alone multiple offers. Also, if you take the first offer you receive on your house you could seriously be limiting the price it could potentially sell for.
- Property Viewing's—are you available to show your home at all hours of the day?—most people are not. In a hot real estate market you could be overwhelmed with number of showing requests you receive. When you list your home with a realtor® the brokerage coordinates and schedules all appointments for agents to show their clients who have already been vetted and pre-qualified. Also, do you really want to invite complete strangers into your home?
- Buyer Agents Still expect to get paid—finally, if you decide to sell privately or list with a low cost brokerage you should understand how commission gets paid. First, when a home is listed on the MLS usually it is the seller that pays the commission—an amount that is shared between a Listing Brokerage and a Co-operating-Buyer Brokerage. Today most buyers use a real estate agent/brokerage to purchase a home—87% according to a recent NAR report. This means that they are contractually bound by a real estate brokerage and—you guessed it—the brokerage expects to be paid for their services! With this in mind if you decide to sell privately and are not offering to pay a co-operating brokerage commission the onus is then on the buyer to pay. I can tell you from experience that most buyers do not want or expect to have to pay commission when they purchase a home. In fact, some buyers may choose to simply overlook your listing faced with the prospect of having to pay the commission which could limit the number of buyers who see your home.