Market Update and Going Forward

Monthsept

 

Market Update and Going Forward

The average sale price of a residential home in our local market is up again, as it was from the previous year. We have actually had increases in average sale prices year over year since 1996. For example, according to statistics from our local Hamilton-Burlington Real Estate Board the average sale price on Hamilton Mountain for June of this year was $330,545 and for June 2014 it was $297,789 which works out to just over a 10% increase.
 
There are two main reasons for this increase, lower mortgage rates and more importantly local market demand for residential housing. The Canada Mortgage and Housing Corporation (CMHC) has given statistics that our Hamilton locality has gained in net population by approximately 3000 a year for several years now with much of this as a result of migration from the Greater Toronto Area (GTA). Once the mortgage rate factor is adjusted in to the market I do expect that the percentage increase will be more moderate. For example a mortgage rate going from say 2.5% to that of a 2.25% on a 3 year term is actually a 10% decrease for the consumer so it is apparent how this affects affordability and average sale prices. In terms of market demand there is an influx of population however pressure on prices is eased somewhat as there is substantial new housing development underway in our area.
 
The main downside on the future market is the economy. We have lost good well paying manufacturing jobs and governments are restraining in spending trying to balance budgets. Even so, it is my opinion that our local market will remain active and healthy as long interest rates stay where they are. I say this as the same impact will apply to a .5% rate increase on a 2.5% 3 year term which would actually be a 20% increase for the consumer.
 
We are fortunate to be in an unique local market and we should be able to weather recessionary pressures in the short term in my opinion. A home is a basic need and we have market demand due to population increase. Even if some of the population does not qualify to purchase a home rental demand will be strong and investors will pick up the slack by funding income properties. All in all I see a strong sustainable housing market for the Hamilton and surrounding area going forward which is a real benefit for protecting equity in a home and also gives the consumer freedom to make strategic moves in the market just because it is active.
 
If anyone is considering of making a move or investing in an income property it is best to plan in
advance. Timing, preparation and strategy are important. Please feel free to contact us anytime.
 
All the best!
 
Sincerely,
 
Rob Kozak and John Schlett