As province moves to cool Toronto housing, what happens in Hamilton?
Toronto average price rose 33% from March 2016 to March 2017; Hamilton average price rose 28%
As Toronto's extreme housing market gets attention from all three levels of government this week, what do the options they're considering to cool things down in the GTA mean for Hamilton?
Toronto average home prices shot up 33 per cent in a year, March numbers showed. But Hamilton average prices rose at nearly the same fast clip: 28 per cent. Prices in the central city have more than doubled in the last decade.
And that growth is leading to anxiety in the market and pressure on buyers who are at the wrong end of an imbalance of supply and demand.
Provincial officials are expected to announce reforms Thursday that would make it easier to buy and rent homes in the Greater Toronto Area, to "stabilize" the housing market. And here in Hamilton, economists, realtors and tenant advocates are watching the government's moves to see what, if any, effect it has on Hamilton's runaway prices.
- What governments could do to cool GTA real estate market
- Ontario's curbs on hot housing market coming Thursday
Among the measures the province might implement: Rent control on more buildings, moves to help increase housing supply, a crackdown on unethical realtor practices and a tax on flipping.
The problem is people want relief now. We can't keep going even for another six months like this.- Adrienne Havercroft
It's unclear how any of the possible reforms the province and feds are contemplating would be applied to Hamilton.
And it's also unclear even if prices did stop climbing so much or even go down in Toronto, whether there would be an impact on Hamilton, where the average price is about half what the average price in Toronto was in March.
But the frenzy is definitely here. Hamilton's housing market is inextricably linked to what happens next door in Canada's largest housing market.
And lately, the hot housing market in Hamilton has been freaking a lot of people out.
"Hamilton's housing market is very much affected by Toronto," said Sara Mayo, a social planner at the Social Planning and Research Council of Hamilton. "There's a lot of flow of both people but also capital, in terms of speculation."
"Housing needs to be primarily for people, not for income generation," she said. "And this is the huge problem, that we've allowed it to get so crazy."
'The realtors are as frustrated as their clients'
Though the province may aim to tackle unethical practices by some real estate agents, there's a misperception sometimes that realtors control the market more than they do, said George O'Neill, the CEO of the Realtors Association of Hamilton-Burlington, which manages the real estate listings for the region and keeps statistics about the market.
"The realtors, quite frankly, are as frustrated as their clients – they're working lockstep together," O'Neill said.
"It's clearly a supply-demand imbalance," he said. A more balanced market is really better for everybody. We don't want a market where people can't afford to buy a home."
O'Neill said the RAHB is in favour of some government intervention to increase housing supply and increase incentives for affordable housing.
But he said he's skeptical of measures like taxing flippers and instituting rent controls.
"I'm not sure that will work because how do you define a speculator, how do you define a flipper?" he said.
'A ridiculous rate of increase'
Richard Harris studies real estate and housing trends as a geography professor at McMaster University.
Harris believes Toronto and Hamilton are in a "bubble" of housing prices, meaning that prices have become detached from underlying economic factors like incomes and rents.
Prices have risen at "a ridiculous rate of increase," he said. "If the bubble bursts in Toronto it has to burst in Hamilton."
He said he doesn't think any of the proposals floated by the government have the potential to make much of an impact. But he does say that some moves could have a positive effect in lowering feelings of desperation around buying now or being priced out forever.
"Quite honestly I don't think any of them are going to do much," he said. "If any of them are useful at all, I think it's mostly because they might affect the psychology."
Moreover, there are strong arguments that can be made against any of the measures, he said. Any tax on property that is going to be rented out will just make life worse for tenants, he said, for example.
Mayo, from the Social Planning and Research Council, said the rent control proposal on buildings built after 1991 is "overdue" but doesn't go far enough. She said applying rent control to the unit, rather than just to a tenant's stay in that unit, could help keep the market in control.
She also wants to see more protections around "secondary" units, like houses that have been split into three or four units.
'A level of anxiety'
Adrienne Havercroft, a realtor with Hamilton's City Brokerage, said fellow realtors were cheering for much of Hamilton's renewal, but recently there's been a "level of anxiety that's crept in."
It's not uncommon to be up against more than a dozen other would-be buyers on a single house. All of the pressure in the market is trickling down to the buyer, she said.
"I definitely think there's been a shift in tenor," Havercroft said. "It feels like in the last couple of months, people are like 'Wait a second, it's too much.'"
"You could [buy] here with a decent middle-class job and all of a sudden, who can afford this? It feels like a different demographic. Two people with decent jobs can't afford to buy into a neighbourhood in the lower city anymore."
But Havercroft said she's nervous about quick government action that may bring unintended consequences.
She said she doesn't want to see a tax on house flipping – she doesn't want to see anything restrict people wanting to put a property on the market.
"You don't want to incentivize people not to sell properties because that could constrict supply further," she said.
But she says something does have to change.
"Personally I think there has to be something done; the market needs an intervention," she said. "The problem is people want relief now. We can't keep going even for another six months like this."
With files from Mike Crawley