Hamilton housing prices will keep driving locals away: CMHC

Housing prices are going up just as full-time jobs are going down. So people are moving elsewhere.

Housing prices are going up just as full-time jobs are going down. So people are moving out

Housing prices are increasing, but full-time jobs are on the decline, shows figures from the Canada Mortgage and Housing Corporation. (Sean Kilpatrick/Canadian Press)

As housing prices go up and full-time jobs go down, Hamiltonians are moving to outlying areas like Brantford, St. Catharines and Caledonia just to be able to afford a house. And a senior market analyst with the Canada Mortgage and Housing Corporation (CMHC) says that migration trend is only going to continue.

Abdul Kargbo, speaking at a National Housing Day event Friday, said Hamilton houses will only get less affordable in the coming years. And that comes just as there are fewer full-time jobs here.

The market for the Hamilton-Burlington-Grimsby area is overheated — meaning wages and employment rates aren't keeping up with housing prices — and the CMHC red-flagged it as problematic this year. That's not about to change, Kargbo said.

"The longer we go into (overvaluation), the more challenging it becomes to come back to what we call equilibrium level, to balance between the price and those economic variables," says Abdul Kargbo, a senior market analyst with the Canada Mortgage and Housing Corporation, at National Housing Day in Hamilton. (Samantha Craggs/CBC)

Meanwhile, the price gap between a house in Toronto and Hamilton will only keep widening, which is driving more Torontonians here, he said during a presentation at National Housing Day Friday. In 2001, for example, there was a $79,081 difference between a house in Toronto versus a house in Hamilton. In 2016 so far, that number is $228,577.

As long as that disparity keeps widening — and it will, he said— Hamilton's housing prices will trend upward, even if its employment rates trend downward.

Hamilton has had a hot housing market in recent years. In the last year alone, the price of an existing home in Hamilton has increased by about 14 per cent. Last year, the average price of an existing home was $447,000. As of September this year, that price is about $511,000.

Hamilton's housing market suffers from overvaluation, as does Canada's. (CMHC)

In contrast, the average price of a home sold in Brantford last month was $366,310, according to the Brantford Regional Real Estate Association.

Some call Hamilton's rising housing prices a mere correction after years of being undervalued. Local affordable housing advocates are sounding the alarm though, saying it's hard for people with lower wages and precarious employment to enter the market.

That's still the case, Kargbo said Friday, which will mean a "huge imbalance" in the coming years.

In the 25 to 44 age group, 4.1 per cent more are employed full time than last year. But that number has decreased 2.3 per cent for people aged 45 to 64 and 10.5 per cent for ages 15 to 24. Overall, the percentage of full-time jobs has decreased in Hamilton. (CMHC/Statistics Canada)

"You'll see, as we're beginning to see now, average Hamilton folks — particularly first-time home buyers — leaving Hamilton because they're priced out."

That's not news to Renee Wetselaar, director of the Affordable Housing Flagship.

When you match up precarious employment and stagnating wages with housing prices, "there's a real disconnect between the two pieces," she said.

Jobs in health care and retail have increased. So have construction jobs, which is influenced by Hamilton's hot housing market. Manufacturing jobs are on the decline. (CMHC/Statistics Canada)

That's why it's more important than ever to have the conversation at National Housing Day, she said. The focus was on how to have neighbourhoods with people with a mix of incomes.

"We can't have any more urban sprawl," she said. "People are going to need to think deeply about what we need to do to have more balanced neighbourhoods."

With files from Mahnoor Yawar