Sold! How a hot real estate market is changing Hamilton
First of CBC Hamilton's four-part series on the city's housing market
For seven years, 446 Dundurn St. S. didn't get much love.
It's a large brick house built in the early 1960s, a former duplex in the Kirkendall neighbourhood. It went on the market a couple of times in the past decade, sometimes for as low as $105,000. And still, no one bit.
Last year, developer Greg Hart bought it for around $200,000. Today, the house that sat vacant for seven years is expected to go for about $600,000.
Such is the strength of Hamilton's booming real estate market. Ten years ago, houses in this quiet neighbourhood near trendy Locke Street sold for an average of $186,267. Today, the average sale price has nearly doubled to $317,089.
Hart probably wouldn't even have bought the Dundurn place 10 years ago, he said, let alone put five months of renovation work into flipping it. But times have changed.
"Locke and Dundurn are very desirable areas. People have always wanted to live here," said Hart, who owns Skyway Construction. "But in the last few years, it's just been crazy."
Times have changed when comes to house prices in Hamilton. To some, the hot market is a welcome sign of ecomomic progress and optimism about the city. But along with all the good are some challenges: dramatic changes to local neighbourhoods, worries about accessibility for first time buyers, the impacts on rents and affordable housing and how higher market value taxes will affect those on fixed incomes.
Leading the way
Sold: How a hot housing market is changing Hamilton
A four-part series looking at Hamilton’s housing price boom and what it means to the city.
Today: The hot spots: Hamilton’s hot housing market.
Tomorrow: Waterdown: From village to bedroom community.
Thursday: Who’s getting left behind?
Friday: Is Hamilton becoming a suburb? Are we making the right choices?
Housing report after housing report over the past few years show Hamilton housing prices are not only increasing year over year, but outpacing the rest of the country.
In 2012, housing prices in Ontario increased an average of 3.6 per cent. But in Hamilton, a recent BMO study shows, they increased 5.1 per cent. Earlier this year, they increased about 3 per cent in the month of January alone.
Over the last three to five years in particular, housing prices in Hamilton are gaining momentum. Since 2008, the average price of a house in Hamilton and Burlington has increased by about $80,000 — from $287,512 to $365,338.
Anomaly in Canada
In recent years, even when the rest of the country sees a downturn, Hamilton's housing market has remained exceptional.
Most recently, BMO's Home Buying Report shows that Canadian housing prices have stayed relatively balanced over the last year, but prices in Hamilton, Winnipeg and Regina bucked the trend.
In January, the National Bank of Canada released the Teranet-National Bank House Price index, which showed that Hamilton housing prices grew 7.4 per cent in 2012, the highest of the 11 cities in the report.
Average house prices in July 2013
Hamilton-Burlington — $387,108
Toronto — $513,246
Oakville — $630,500
Mississauga — $482,330
Kitchener-Waterloo — $318,991
Cambridge — $294,644
Brantford — $250,496
Source: Canadian Real Estate Board
Eight of the markets, including Toronto and Ottawa, saw declines. Only Hamilton, Quebec City and Victoria had gains.
"It looks like Hamilton is still a tight market," said Marc Pinsonneault, senior economist with the National Bank of Canada, earlier this year. "There are few places like that in Canada."
Some of the sales are Hamiltonians selling up or getting into the market. Some are residents from the GTA, moving from cities where the average house price surpasses half a million dollars to a city where housing prices are seen as a bargain.
Some see it as a long overdue correction to what has been an undervalued market. Others see a change in attitudes by Hamiltonians about the city's future prospects.
In certain areas, such as Kirkendall, the growth has been marked.
Proximity to Highway 403, McMaster University and the Locke Street area help, said Ian Davies, a local sales representative with Keller Williams. Nearby Strathcona, with its historically low prices and closeness to major arteries, is also popular with commuters. There, housing prices have increased by 87 per cent in the last 10 years.
Realtors also cite Durand as a hot spot, where housing prices have increased about 70 per cent. Close to downtown and filled with tidy, tree-lined streets, Durand has attractive historic homes. And at least one major condo project is underway.
Stoney Creek Mountain is booming, benefiting from the increased access of the Red Hill Valley Parkway.
In Binbrook, where new subdivisions sprawl over former green space, prices have increased 85 per cent in the last 10 years.
The trouble with mortgage rates
Ancaster Meadows is flourishing. Prices in Westdale, with its student housing and quaint shopping area lined with fresh flowers, are trending upward. Prices have also increased in Flamborough, where Waterdown's population is expected to double in the next few years because of a rash of housing developments.
Richard Harris, a housing expert in McMaster's School of Geography and Earth Sciences, attributes Hamilton's boom to two factors — lower mortgage rates and increased buzz about the city.
The Bank of Canada slashed mortgage rates around the 2008 financial crash, Harris said. So people bought, believing that investing in housing brings a guaranteed payback. A similar attitude caused the U.S. housing bubble, Harris said. Because of this, we should be cautious.
"What people are taking for granted now is certainly without precedent and it certainly cannot last," he said.
But changing attitudes about Hamilton have also contributed, Harris said.
Attitudes about Hamilton changing
In the last five years, "local attitudes — the way Hamiltonians think about the prospects for their city, especially the downtown — have changed," he said. "There's a lot of belief in the possibility of revival."
Ross Godsoe, CEO of the Realtors Association of Hamilton and Burlington (RAHB), sees this boom as stable and reasonable. It's not so much an unhealthy leap as a market adjustment, he said.
For years, Hamilton real estate was "undervalued" compared to cities such as Mississauga and Oakville, he said. And Hamilton is seen by many in the GTA as inexpensive for first-time homeowners.
"Let's face it. Where can you buy a detached house, even in Burlington or Oakville, for $220,000?" he said. "I can't be any more positive as far as speaking out about the housing market in the greater Hamilton area. As long as we see the economy increase, we're in good shape."
What happens to community?
The boom in Waterdown is good news for the town, said Coun. Judi Partridge, who represents the area and grew up nearby. But she also sees the challenges.
With all the newcomers, it's taking a special effort to keep the community's traditional feel, she said. Local volunteer-run committees are purposely organizing more community events so new and long-time residents can bond. But challenges, such as traffic and lack of affordable housing, still persist. And life-long Waterdown residents are nervous.
"You have people who are genuinely scared," Partridge said. "They're afraid of what will happen to their community."
Some are left out
There is a downside to the hot market, said Renee Wetselaar, project director of Hamilton's Affordable Housing Flagship.
The more prices go up, the tougher it is on young couples looking to buy in Hamilton. It also means rental prices are increasing too, and low-income Hamiltonians cannot afford that.
"People who are traditionally left out of the housing market continue to be left out," she said.
With rising prices, "it's very hard for people to move along the housing continuum."
Increasing property values often bring another strain — higher taxes, said Larry Friday, Hamilton's director of taxation. The Municipal Property Assessment Corporation (MPAC) assesses the market value of people's homes.
A sudden increase in property values can mean suddenly higher taxes for residents who have owned their home for years, Friday said. The properties impacted most are those that surpass the average assessment in Hamilton, which increased about 18.6 per cent from 2008 to 2012, Friday said.
Assessment has gone up on individual blocks, Friday said, but no one neighbourhood has been hit with substantially higher taxes in the last four years.
Mayor Bob Bratina is focused on the positive. He thinks the housing market will continue to improve. Hamilton is catching up to its neighbours when it comes to housing prices, he said. He sees the downtown core, a possible future home of all-day GO service, as being an area for growth.
"We're still being discovered," he said.
For Hart, who has been in the game for more than 30 years, it's a good time to do what he does. He estimates that he's flipped about 100 homes in his time, he said, and this boom is unprecedented.
"I'm not sure where the top end of the market is going to stop, but right now, if you have a good quality product, people are buying," he said.
"The only downside is up to the bank of Canada, but I don't see that happening."
- An earlier version of the story said that houses in the Locke Street area have nearly tripled. In fact, they have nearly doubled.Sep 13, 2013 3:50 PM ET