After a "volatile" 2017, realtors didn't get a whole lot of reassurance on Wednesday that the recent slowdown in the Hamilton housing market will be short-lived.

New mortgage qualifying rules coming into effect Jan. 1 will lower buyers' buying power, and keep would-be sellers in homes they'd rather move up from.

No matter how much of a down payment borrowers have, they will have to submit to a "stress test" to see how well they would weather an interest rate increase.

Hundreds of Hamilton and Burlington realtors met over breakfast at Liuna Station to hear from experts from the Canada Mortgage and Housing Corporation (CMHC), the Canadian Real Estate Association and the appraisal and legal fields.

As longtime local broker Lou Piriano put it, it was a morning of a "little crystal ball-gazing and some real, hard facts."

'We saw things change drastically'

CMHC analyst Anthony Passarelli said 2017 has been "a very volatile year in the market."

While sales were well above average in the first quarter of 2017, sales dropped in a "wild swing in demand in a short period of time" in the second and third quarters.

Anthony Passarelli

Anthony Passarelli, market analyst for the CMHC specializing in Hamilton and Burlington, spoke to a gathering of realtors at Liuna Station on Wednesday. (Kelly Bennett/CBC)

"Second quarter, we saw things change drastically," Passarelli said. "I was talking about the whole volatility story. This is where you really see it."

First-quarter sales were 18 per cent higher than the five-year average.

Second-quarter sales were six per cent below average, and third-quarter sales were 22 per cent below average.

The second quarter encompassed April, when Ontario officials announced measures intended to cool overheated markets in Toronto and the greater Golden Horseshoe.

"We definitely believe that had an impact on buyer expectations, at a minimum," Passarelli said.

CMHC forecasts that sales will end 2017 between two and six per cent below the five-year average.

In 2018, he expects sales will be down between two and 11 per cent compared to the five-year average.

Sales dropped more dramatically in higher-cost neighbourhoods in Hamilton and Burlington in the third quarter compared to the five-year average.

In the third quarter — July, August and September — there were 37 per cent fewer homes sold in Burlington than average for that quarter. Flamborough and Waterdown had sales drop 30 per cent, and Dundas and Ancaster sales dropped by 25 per cent.

Where were prices down the most?

A chart from CMHC shows that sales were down to a greater extent in Burlington, Ancaster and Flamborough/Waterdown in the third quarter of this year compared to the five-year average for the quarter. (CMHC)

CMHC has predicted that average prices in 2018 won't be "much higher" than this year's average price.

But this year's average price will still be "significantly higher" than 2016, in part because prices rose so extremely in the first quarter of 2017 before the provincial government instituted new rules aimed at cooling hot Toronto and Hamilton markets.

Here are the factors economists are looking at that could affect which end of the price range the market lands on:

  • Prices will be toward the higher end of that range if demand is greater than expected for housing, due to more jobs than expected or mortgage rates staying steady.
  • Prices will be toward the bottom end of that range if prices drop in Toronto resulting in fewer buyers coming in to Hamilton.

But the new stress test may also play a role as what people can afford to buy changes.

CREA chief economist Gregory Klump said that if there's a rush to buy before year-end, that could "steal" demand from the new year.

He also predicted there may be more deals falling through if buyers are unable to get enough financing to buy the house they'd bid on.

kelly.bennett@cbc.ca