Just how hot was Hamilton housing in 2015?

A record-breaking number of properties– about 16,000 – sold this year in Hamilton and Burlington. There were 24 per cent more homes sold in November than the average over the last 10 Novembers.

'It's more like coming back to Earth.' - Diana Petramala, economist, TD Bank

The average price homes sold for in the first 11 months of 2015 was about 9 per cent higher than in the same period in 2014, according to numbers from the Realtors Association of Hamilton-Burlington.

Keep that in mind if you see headlines about prices or sales "falling" in 2016. Compared to such a banner year, even prices and sales levels that are much higher than normal could appear like a dip from 2015, experts say. TD Bank economists project a drop of 8 per cent in the number of sales next year, but the estimated 14,500-some will be on par with 2014 levels. 

"Prices and sales are rising at close to double-digit levels, which is unsustainable," said TD economist Diana Petramala. "Double-digit (growth) doesn't typically tend to last for too long. But Hamilton is definitely expected to be one of the outperforming markets."

"It's more like coming back to Earth," she said.

"The market will remain strong, but it's all relative," said Abdul Kargbo, analyst with the Canadian Mortgage and Housing Corp. "Relative to what? 2015 will definitely be a record year. 2016 and 2017 will be a little lower than 2015."

The housing market's frenzied pace is not good news for everyone. Local homeless shelters have been so full they're turning people away. First-time buyers find themselves navigating – and often getting beat by investors in – multiple-offer bidding wars.

And so that slowing of the pace that Petramala and Kargbo mention could bring some relief to a market many fear will leave Hamiltonians with lower-than-average incomes behind.

Here are some economic factors to consider, no matter where on the market continuum you and your household are.

Should I buy?

Hamilton housing prices will most likely rise in 2016, the economists interviewed for this story all said. On-the-fence would-be buyers may take that as a cue to try to jump in.

If the house you're buying costs more than $500,000, you'll be subject to new down payment requirements starting in February.

If you do decide to buy this year, be patient. There were 29 per cent more homes sold in the centre city in the first nine months of 2015 than in 2014, meaning the lower-cost parts of Hamilton's market are competitive.

And the cost of ownership is still close to what it costs to rent, presuming you have or can muster up a down payment. The average rent for a two-bedroom unit in 2015 was slightly higher than the monthly amount a homebuyer would pay on a mortgage with a 5-per-cent down payment on the average-priced condo that sold this year, according to CMHC numbers.

That may change if interest rates rise in 2016. While some economists projected they'd rise in 2015, they held steady at historically low levels – a factor that allows buyers to afford more house for the monthly money they have available. If rates rise, it will get more expensive to buy.

Should I sell?

If you're looking to profit from the huge upswing in prices, consider that the gangbusters increases in prices are expected to level off somewhat next year. Petramala and TD economists project prices will rise around 4 per cent in Hamilton compared to 2015. That increase is close to what they're projecting for Toronto and Vancouver, the two hottest markets in the country, she said, but down from 9 per cent this year.

The market has been definitely tilted toward sellers this year. It's too early to tell what impact the coming condo developments will have on the supply-demand balance.

What about renters?

The percentage of apartment units that are available — an indication of housing affordability and market tightness — rose in 2015 compared to 2014, according to numbers the CMHC released in December. That came in part from a "surge" in renters jumping into homeownership and vacating their units.

But even with increased supply, rents rose dramatically, up 3.8 per cent to an average of $1,034 for a two-bedroom unit compared to 2014.

"The big news that everyone's talking about is the gentrification," said Richard Harris, a geography professor at McMaster University who studies local housing. "Or, call it what you like but that's the one that everyone's using and it's good enough."

Tracking that displacement and the squeeze put on renters as building owners try to spruce up their units and raise rents or convert to condos is more difficult. Harris said he hopes to find ways to study displacement in the coming months.