Hamilton housing market continues downward trend in April

Real estate sales in the city continued their downward slide last month, with 32.4 per cent fewer sales compared to April of 2017, according to new numbers from the Realtors Association of Hamilton-Burlington (RAHB).

Realtors say Canada's new mortgage stress test has had an impact on the local market

Housing sales in Hamilton have continued to drop in recent months. (Jonathan Hayward/Canadian Press)

Housing sales in the city continued their downward slide last month, with 32.4 per cent fewer sales compared to April of 2017, according to new numbers from the Realtors Association of Hamilton-Burlington (RAHB).

April's figures show slowdowns compared to a year ago not just in sales, but also in prices and the amount of time it takes to sell a property. Last April was the peak in the market and prices have been declining since then.

The 1,185 sales reported in April 2018 represented 21.7 per cent fewer than the 10-year average for the month, but RAHB CEO George O'Neill explained it's important to keep in mind that the numbers are being compared to a multi-year sales peak in.

"It's no surprise sales were down from last April, when we saw a record in that month," he stated in a media release.

Mortgage stress is a factor

O'Neill also pointed to another factor he believes have had an impact on home sales in the area: Canada's new mortgage stress test.

Borrowers are now required to pass a test on their mortgages, where banks qualify them based on whether they could still afford their monthly payments if interest rates were 2 per cent higher.

The CEO said both sales and prices in the area have dropped each month since the new measure was put in place on Jan. 1.

"It's forcing people to qualify at a lower mortgage," he explained, adding the test has been especially tough on buyers.

"They've really had to adjust to what they can afford."

However, home prices have also dropped in comparison to the same period last year, in part closing that affordability gap created by the stress test. The average sale price for all property types dropping 8.9 per cent from $609,664 to $555,661.

Still a 'balanced market'

Houses are spending more time on the market too. The average number of days it took to sell a home jumped from just 14 days in April 2017 to 26 last month.

"We have a sales-to-new-listing ration of 56 per cent, so it's still a balanced market, even if we are at the higher end," said O'Neill. 

But, he added, there's only about two month's worth of inventory left, so the city could move to a seller's market through the spring.

Despite the drops, O'Neill said he believes the changes the government has made will have positive outcomes.

"Last year 88 per cent of homes were sold in two weeks or less," he explained. "That's not sustainable. This is actually better for everyone in the long run."