As Canada drives through one of the worst recessions in more than 70 years, the Hamilton- Burlington area reported June as being the highest selling month in local real estate history.
“June marked the sixth straight month of increased sales and had the highest number of residential sales on record, surpassing the record number sold in May 2007 during that year’s scorching market,” said Bruce King, president of the Realtors Association of Hamilton-Burlington (RAHB).
According to RAHB figures, the sale of residential properties in June totalled 1,560 with 1,267 freehold properties and 293 condominiums sold. There were 213 properties sold on the Hamilton Mountain, 64 in Ancaster, 46 in Dundas, and 122 in Stoney Creek. The remainder were sold in Hamilton and Burlington.
The average price of a residential property sold in June went up 1.9 per cent over June of last year to $315,055.
Marvin Ryder, lecturer of Strategic Market Leadership at the DeGroote School of Business, said one of the main factors contributing to the increase in sales in the resale house market is low interest rates.
“Even 40, 50 years ago we weren’t seeing numbers like this,” he said. “I would be reluctant to say they (the interest rates) are the lowest ever in recorded history, but they are the lowest in recent history, and that’s got to be good news for the market.”
The current prime rate in Canada is 0.25 per cent. This rate fluctuates when the Bank of Canada decides to raise or lower lending rates. The prime rate affects the average consumer because the rates on mortgages, credit cards and cars, follow the rise and fall of this rate.
The Bank of Canada has guaranteed the low rate through to June of 2010.
“We suspect the Bank of Canada rates will creep up within the later part of 2010, and possibly by Christmas of 2010 it may be around 1.5 to 2.0 per cent,” said Mr. Ryder. “Which means a mortgage will be around 4.5 to 5.0 per cent, and that still is very, very low. That’s what people were paying 40 years ago.”
He also said another factor for the thriving resale market is consumer confidence, which comes from the fact that seven of Hamilton’s top 10 employers are in the public sector, and have been relatively unaffected by the recession.
Mr. Ryder said these employees feel more confident about their future and carrying a mortgage.
One of the areas not benefiting from this booming market is new home sales. According to reported figures from Canada Mortgage and Housing Corporation, new home starts in Hamilton in 2009 dropped 60 per cent, from 1,165 units built in June 2008 to 405 in June of 2009.
Douglas Duke, the executive officer of Hamilton-Halton Home Builders’ Association, said one of the things driving the resale market are specific price point products such as homes selling from $200,000 to $275,000.
“You don’t find new homes in that price range now,” he said. A single detached new home in Hamilton would cost around $375,000, Duke added.
“I think we’ve seen the worst of it, but I don’t think the worst is over. It’s going to continue to be slow for the rest of this year and it won’t be until the end of next year that it will come back up in a positive way,” Mr. Duke said.
Despite the decline in new home sales, the resale market is expected to remain stable, said Mr. King.
“With prices remaining reasonable, consumers have found their way back to the housing market,” he said. “June’s numbers show us once again, that the greater Hamilton-Burlington area remains a great place to live and a great place to buy and sell real estate.”
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