Hamilton housing declared 'overvalued': What it means
CMHC declared Hamilton's housing 'overvalued' in a new report this week
Hamilton's housing market has crossed into new territory: "Overvalued."
That's according to a report released Wednesday by the Canadian Housing and Mortgage Corp. that showed prices growing further detached from local incomes and employment.
"If it was the reverse we'd have people complaining about, 'What are we doing wrong?' That's where we were in the '90s.'" - Chad Collins, Ward 5 councillor and CityHousing Hamilton president
Hamilton joined the ranks of cities like Vancouver and Toronto with "strong evidence of overvaluation".
Hamilton prices are still nowhere near those other cities. The median price for a home sold in June in Hamilton was $400,500. The city of Toronto's was $597,500.
While there is no official data kept on how many Hamilton house buyers come from Toronto, estimates from CMHC previously pegged the share at around 30 per cent in 2013.
When people from Toronto and elsewhere buy here, they're not freeing up another house in Hamilton to ease some of the record-setting supply-demand tightness.
But what should we make of this? What are the upsides and downsides? What can be done?
We asked five people what it means for the city. See their perspectives below.
What do you think? What do you want to know about Hamilton's housing market? Leave a comment below, or share your thoughts with us on Facebook, and we'll try to help answer your questions.
First, here are the factors that led economists to the conclusion that there is "moderate evidence of problematic conditions" in Hamilton's market:
- The relationship between the number of homes for sale, and the number of homes that are selling, reached its tightest level ever in the first three months of this year.
- It's been a seller's market for five years.
- Prices are growing while jobs and incomes were not growing as much in the first quarter this year as they did in the previous quarter.
So… is it good or bad?
Here's what a few different people had to say on the upsides and downsides of such rapid housing price growth.
The gentrification scholar-turned-realtor
Adrienne Havercroft is 33 and studied gentrification for her Master's degree from McMaster University. She's now a realtor and "reluctant capitalist" who owns a home in Stinson.
Upside: "It's a city in demand because of all of the people who are buying houses, who are starting businesses – people who are not doing anything malicious. That's unfortunately how capitalism works. It's good that people want to live here and they didn't want to before."
Downside: "With the rise of precarious labour, people who don't have the security (to save and buy), it just feels like this might be an opportunity that people miss out on. Because they didn't buy in in the first wave."
What can be done: "There still is good value, if you're OK to live in a more diverse neighbourhood or at an earlier rung on that gentrification ladder. Buy something that gives you rental income (to help with mortgage costs). I think the city can expedite the process of updating zoning bylaws (to allow for more units in a house)."
The councillor and CityHousing president
Chad Collins has been a councillor for Ward 5 in Hamilton's east end since 1995 and is president of CityHousing Hamilton, which manages housing complexes for low-income people.
Upside: "That wave of Toronto has hit us. It's arrived and we knew it would and we're forced to deal with it – in a good way."
"We've seen cranes in parts of the city that we haven't seen since the 1960s, 1970s. If it was the reverse we'd have people complaining about, 'What are we doing wrong?' That's where we were in the '90s – 'How do we get people to buy properties downtown?'"
Downside: "My kids are 11 and 12 years old, and I know when they reach the age when they're looking for their first home, it will be very difficult for them to get in the market."
"Just as it's a seller's market for purchasing or selling homes, it's a sellers' market for landlords."
"When you get into the whole issue of affordable housing providers… we're competing with private developers who have a lot of money in their pocket, many of them in Toronto. We used to be able to find a lot somewhere in the city and pay a very reasonable price for it."
What can be done: "I'd rather have it than not have it, but we need to be cognizant of the fact that there are going to be areas within that development mix that we need to be more aware of."
Suzanne Mammel is executive director of the Hamilton Halton Homebuilders Association.
Upside: "The prices of real estate as you head in towards Toronto is just so high that people can't afford it. The name for the phenomenon: 'Drive 'til you can buy.'"
"Hamilton has done a lot of work in terms of economic development – downtown is really coming into its own."
Downside: "As we move forward right now in today's standards, most people still want ground-related housing – single-family, semi-detached. But the policies that are being put in place by the province will really hinder all people's ability to build that type of housing and have it be affordable."
What can be done: "Last year was not the first time we said we can build more if you can process [building permit applications] faster. I think there is a renewed acknowledgement of that by senior staff at the city – this train is coming, take advantage of it."
The pastor and North End activist
Dwayne Cline and his wife bought their house for $110,000 15 years ago on Murray Street in Hamilton. The house next door to them just sold, and the agent said the Clines' could fetch close to $700,000 if they were to sell.
Four houses on their street have sold in the past three months to people from Toronto, he said.
Upside: "I don't think you can stop gentrification. As the city does well, we all do well. We need to be incredibly mindful that some people have a greater opportunity to benefit and we need to make sure that the playing field is level."
Downside: "The two missing pieces are to ensure that those who need entry-level jobs at livable, paying wages have them. And that there are balanced neighbourhoods where people from a variety of incomes and backgrounds can live together and be part of a community matrix.
What can be done: "Rather than letting it happen to us we can lead in it happening. Why not ride it and while we're riding it, how do we use this for the benefit of everyone who living here?"
The GTA/Hamilton real estate economist
Frank Clayton is a senior research fellow at the Ryerson University Centre for Urban Research and Land Development.
Upside: "I think it's a very positive thing – we don't want our cities to stagnate. That's just a part of life."
"The positive side of it is that when you get more people, they need infrastructure – hospitals, doctors, nightclubs."
Downside: "I don't think there is a downside. Hamilton's been the poor cousin of Toronto. Things are starting to happen."
What can be done: "What a municipality can do is to try to encourage affordable housing, allowing single-detached houses to have secondary suites and basements suites."
What do you think? What do you want to know about Hamilton's housing market? Leave a comment below, share your thoughts with us on Facebook, or email them to email@example.com and we'll try to help answer your questions.