Hamilton housing market activity remains stable as some buyers await further interest rate reductions

• By Kayla Wallingham
• Posted Monday, Jul 22, 2024 12:05 pm

Hamilton housing market activity remains stable as some buyers await further interest rate reductions

Aggregate home price increased 1.6% quarter over quarter in Q2 of 2024

HAMILTON, July 11, 2024 – According to the Royal LePage® House Price Survey released today, the aggregate1 price of a home in Hamilton increased modestly by 0.3 per cent year over year to $871,700 in the second quarter of 2024. On a quarterly basis, the aggregate price of a home in the region increased 1.6 per cent.

Broken out by housing type, the median price of a single-family detached home decreased slightly by 0.2 per cent year over year to $912,500 in the second quarter of 2024, while the median price of a condominium increased 1.8 per cent to $491,300 over the same period.

“Hamilton’s housing market has seen a slight uptick in activity over the last few months, which was driven by the typical busy spring season. Buyer demand is slightly stronger in comparison to the same time last year,” said Joe Ferrante, broker of record, Royal LePage State Realty. “Although the Bank of Canada’s recent interest rate cut has not had a significant impact on the market yet, I anticipate that further rate reductions will stimulate more activity. However, as buyers continue to face higher living costs, several more rate cuts are likely needed before we see the market react materially.”

Ferrante noted that Hamilton's inventory has increased across all housing types, offering more options for buyers. However, new developments have slowed due to the higher cost of materials and market uncertainty. Meanwhile, the condominium segment has experienced a slowdown, with plenty of inventory still available.

“Looking ahead to the third quarter and the remainder of the year, I expect sales prices in Hamilton to remain relatively flat, with a potential moderate increase by year-end,” said Ferrante. “Buyers are gradually returning to the market, and if further rate reductions are announced, we can anticipate increased activity and heightened competition.”

Aggregate prices are calculated using a weighted average of the median values of all housing types collected. Data is provided by RPS Real Property Solutions and includes both resale and new build.

Nationally, the aggregate price of a home in Canada increased 1.9 per cent year over year to $824,300 in the second quarter of 2024. On a quarter-over-quarter basis, the national aggregate home price increased 1.5 per cent, despite a slowdown in activity in the country’s most expensive markets.

“Canada’s housing market is struggling to find a consistent rhythm, as the last three months clearly demonstrated,” said Phil Soper, president and CEO, Royal LePage. “Nationally, home prices rose while the number of properties bought and sold sagged; an unusual dynamic. The silver lining: inventory levels in many regions have climbed materially. This is the closest we’ve been to a balanced market in several years.

“This trend dominates activity in two of the country’s largest and most expensive markets, the greater regions of Toronto and Vancouver, where sales are down yet prices remain sticky,” Soper continued. “There are exceptions. In the prairie provinces and Quebec, low supply and tight competition persist.”

Despite the Bank of Canada’s move to cut the overnight lending rate by 25 basis points on June 5th, from 5.0 per cent to 4.75 per cent, buyers did not immediately rush back to the market as initially expected.

“This spring, with bank rate cuts highly anticipated, we saw some buyers race to get a deal done ahead of an expected spike in demand. Yet, when that first cut finally occurred in early June, market response was tepid,” said Soper.

“A change in monetary policy drives consumer behaviour in two important ways. Lower rates mean lower monthly payments, opening the door to some families previously shut out of the market. Secondly is the psychological signal broadcast to sidelined buyers that the tide is turning, and that market activity is about to pick up again,” added Soper. “Not surprisingly, the quarter-point cut to the bank rate didn't substantially improve the affordability picture. As for consumer sentiment, our early year research indicated that only one in ten potential homebuyers would be motivated by a tiny rate drop. The tale the market tells as rate cuts get to the point of a material reduction in the cost of borrowing should be a very different one.”

The Royal LePage National House Price Composite is compiled from proprietary property data nationally and regionally in 64 of the nation’s largest real estate markets. When broken out by housing type, the national median price of a single-family detached home increased 2.2 per cent year over year to $860,600, while the median price of a condominium increased 1.6 per cent year over year to $596,500. On a quarter-over-quarter basis, the median price of a single-family detached home increased 1.8 per cent, while the median price of a condominium increased 0.8 per cent. Price data, which includes both resale and new build, is provided by RPS Real Property Solutions, a leading Canadian real estate valuation company.

“Canada's housing market faces complex challenges. While raising interest rates was crucial to fighting inflation, it has unintentionally choked off the essential flow of new housing supply. Higher borrowing costs, coupled with labour shortages in the construction trades and rising material prices, have made it economically unsustainable for developers to launch new projects. This creates a perfect storm – our population is growing steadily, yet we're building far fewer homes than what's needed to meet that demand. This situation urgently needs innovative solutions to ensure Canadians have access to affordable housing options,” concluded Soper.

Royal LePage is forecasting that the aggregate price of a home in Canada will increase 9.0 per cent in the fourth quarter of 2024, compared to the same quarter last year. Nationally, home prices are forecast to see continued moderate price appreciation throughout the second half of the year.

Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2024 Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2024