Dundas, central and east Hamilton are the new housing hot spots

A for sale sign on a house in an east-end Hamilton neighbourhood.

A for sale sign on a house in an east-end Hamilton neighbourhood.
Scott Gardner/The Hamilton Spectator

Toronto housing refugees looking for bargains in Hamilton are shifting their focus.

A new Canada Mortgage and Housing Corporation outlook study concludes Dundas and the central and east parts of Hamilton will be the new targets for those migrants as prices in Flamborough, Burlington and Ancaster near those of Toronto.

CMHC projected small increases in sales and prices in Dundas and Hamilton east and centre, matched by small declines in Flamborough, Ancaster and Burlington. The rest of the area’s neighbourhoods will hold steady while the overall market next year will be down slightly.

“We don’t see any major disruptions over the coming year,” said senior market analyst Ed Heese. “Really, things are looking pretty flat.”

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The CMHC study shows an average Toronto price of more than $499,000 today, with prices in Flamborough, Ancaster and Burlington hovering around $490,000. Those prices compared to averages of $350,000 in Dundas, $150,000 in central Hamilton and $200,000 in east Hamilton.

That difference in prices has attracted a steady stream of people from the Toronto-Mississauga area westward in search of more house for their money. A recent study by ReMax concluded almost one in every five properties sold in the Hamilton CMA now is purchased by someone from Toronto.

CMHC’s outlook generally matches other recent efforts to divine what’s coming for the future of the largest investment most people ever make.

The recent ReMax report projected average prices in the Hamilton CMA will rise 7 per cent next year to $358,000, and a study by BMO economists concluded Canada’s housing market is softening but won’t collapse.

Several forces are behind the softening market, including recent changes in federal mortgage rules that have made homes less affordable by shortening amortization periods and increasing minimum down payments. At the same time, tightening supply has helped keep prices up, while continued low interest rates have fuelled demand.

Hamilton’s economy, he added, looks good.

Manufacturing accounts for only 13 per cent of employment here now; full-time employment as a portion of the total workforce is stable and real incomes are rising after several years. At the same time, the area is getting a higher share of migrants in the prime earning age range of 25 to 44 — about 10,000 over the past five years. During the same period, the Hamilton CMA became home to 15,370 migrants from Toronto and 15,702 immigrants from foreign lands.

On the negative side of the ledger, while the number of people migrating west from Ontario is expected to fall, Hamilton and other industrial centres will continue to lose population to that flow.

“Hamilton’s economy is relatively diverse now and that’s a good thing because it protects Hamilton from the kind of vulnerability we saw in 2008,” said Abdul Kargbo, CMHC’s senior analyst for Hamilton. “Putting it all together, those factors are sufficient to attract people into Hamilton.”

Heese added the housing market will continue to be affected by general economic uncertainty, especially in the United States, and its effect on jobs in Canada.

Encouraging signs from the U.S. include auto sales that continue to inch back to prerecession levels, rising American employment and signs that home building is starting again as the inventory of foreclosed homes finally starts to bottom out.

A big question mark, however, remains over American public debt and the chances of finding a way to compromise with those who oppose paying it with increased taxes.

“The current level of public debt in the U.S. is not sustainable and they have to do something about it,” Heese said. “The plans that are supposed to go into effect Jan. 1 will push the country back into recession so both sides know the effect of refusing to compromise.”

The “bottom line,” CMHC concludes, is a “slow but steady” market where prices will drop 1 or 2 per cent of two quarters before starting to rise again.

The only threat to that is the possibility of sharp increases in mortgage rates — something Heese says isn’t likely.

Posted five-year rates, he said, are around 5 per cent today although most buyers can negotiate a lower rate. If rates rise, he predicted they won’t pass 6 per cent.

“We see these forces keeping interest rates pretty close to where they are now,” he said.

sarnold@thespec.com

| @arnoldatTheSpec


 

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