Hamilton housing sales drop in January; is 'stress test' the cause?
As sales fall, listings are up, new report shows
Housing sales in the city dropped over a quarter last month compared to January of 2017, according to new numbers from the Realtors Association of Hamilton-Burlington (RAHB).
The reported 665 monthly sales were also 12.5 per cent lower than the 10-year average, the report says.
In the meantime, property listings were 6.3 per cent higher than the same month last year, but still 22.3 per cent lower than the 10-year average.
In a statement, RAHB CEO George O'Neill referred to the drop as a "winter chill."
"Both listings and sales were considerably lower than the 10-year average for the month of January," he said. "Even so, with more listings at the end of the month than last year, we have a more balanced market, with a sales-to-new listings ratio of 56.7 per cent and over three months of listing inventory for the residential market."
Prices still up year-over-year
Prices for the homes sold in January were higher than homes sold in the same month a year ago.
The median price across Hamilton and Burlington was $469,000, up 6.6 per cent from January 2017.
Strictly looking at Hamilton prices, the median was $450,000, up 8.4 per cent from a year ago.
In Burlington alone, prices fell by 8 per cent. The median in January was $625,000, down from $680,000 in the same month the year earlier.
Housing prices in Hamilton reached a peak in April of 2017 when the market was at its hottest, but have been sliding ever since.
The overall Hamilton-Burlington median price was down 12.3 per cent from April 2017.
The Hamilton-only price was down 11.8 per cent from last April. And in Burlington, the peak was higher in March – January 2018 median price was down 17 per cent from March last year.
Sales drop off at same time as 'stress test'
The drop in sales comes in the midst of a new "stress test" for buyers that came into effect on Jan. 1.
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.
Sales have dropped off once more. Whether this is a lasting pattern is still to be seen.- George O'Neill, RAHB CEO
In addition to lowering the amount buyers can finance, the move was expected to dampen demand by allowing fewer people to qualify for loans. That in turn could bring prices lower as sellers find fewer buyers able to pay premium prices.
It means to qualify, buyers might have to lower their price range by 15 per cent or more and consider different neighbourhoods.
"While it is hard to know for sure, the new mortgage stress test that became effective January 1, 2018 may have affected sales for the month," O'Neill said.
"After an initial drop in sales after the April announcement of the Ontario Fair Housing Plan, sales were higher than the 10-year average again for the last three months of last year.
"Now, after the second government policy has come into effect, sales have dropped off once more. Whether this is a lasting pattern is still to be seen."
On the market longer
After the ups and downs of 207, the RAHB says the average price of detached homes and townhouses in January 2018 is at about the same level as January of last year. Condo prices, however, are 6.9 per cent higher, year-over-year.
Homes are sitting on the market for longer, too. Detached homes and townhouses were on the market for 46 days on average last month, compared to 31 days in January of last year.
Condos are on the market longer as well, up to 38 days on average last month up from 28 days in January of 2017.
"The most dramatic changes from last year to this are the number of days on market and the end of month listing inventory," said O'Neill.
"Last year we had few properties available so they were being snapped up quickly, while this year, with more listings on the market, buyers generally have more time to comparison shop."