2019 Housing Market Outlook
If you’re thinking about moving in the next 12 months, here’s a bit of inside info to help you decide if it’s the right time for you.
There were some big changes in the 2018 housing market, with prices finally starting to damper from record highs.
Should we expect the same tumultuous market it’s been for the past couple of years?
Here’s some food for thought when you’re thinking about your next move…
Supply & Demand
Lack of inventory still prevalent, especially in the entry level price ranges
Supply & Demand are what dictates a real estate market health and flow. There is still shortage of supply in the GTA (especially of low-mid rises and townhouses), which indicates prices won’t drop, and there won’t be a massive housing correction. The 2008 housing crash was because lots of major US cities were overbuilt. There is no crash or major correction in sight in the Hamilton Burlington area. We increased in price last year on average more then any Ontario city (7-8%), and we continue to be a desirable option rather then high home prices in the GTA. Prices will increase with inflation, perhaps more in certain price ranges and locations.
The average days on Market in the Hamilton Burlington Market at the time of writing this (based on December 2018 stats), is around 40 days.
This is more flexible then the hot markets in 2017, but in certain price ranges, locations and styles of home, homes are selling fast. If it’s priced right and move in ready (fully-renovated), you will likely find a turn key Buyer (in many price ranges).
Buyers have more breathing room in the luxury prices ranges, but home that are priced right and staged well, will sell quickly.
It’s a great time to be a Landlord!
Investors with long term strategies have some great opportunities in the Bay Area, with growing population making it a very strong rental market
The rental market has been getting more competitive, due to the government regulations of the stress test, interest rate increase, and other factors that are making it harder to own a home in Canada.
This is forcing many more people into renting a home.
So, if you’re an investor with a clean, affordable (and Cash Flowing!) property, you are going to win now, and later with owning real estate in the Hamilton Burlington Area.
We are even getting the same bedroom community effect with renting in Hamilton, as buying, because renting in the GTA has become so unaffordable to so
The biggest co hort of should be Buyers, are millennials. Since more then half of them can’t afford to buy a house, they are forced to rent, giving Landlords a pool of great tenants to choose from.
With the provincial government now Conservative, you should have an easier time to be a Landlord, then when the liberal Wynne government made it nearly impossible to provide fair affordable housing for Ontarians. Even in a rent controlled area like Ontario, rental prices are increasing VERY quickly, especially in Toronto.
Warning: Real estate has the most number of studies, reports, opinions and forecasting then almost any other industry. Beware of who you listen to! CMHC which is Canada’s leading national authority on housing, even has the average rental numbers massively skewed.
There are more then 300,000 people coming into our country every year, with more then half going to the GTA. We need more rental housing. Immediately! Why not put your money to work for you and be a Landlord? Let’s talk about that when you give me a call to discuss your future.
Canadian Household Debt
Canadians have the 2nd highest household debt in the world, after Australia. This means, that Canadians owe, on average, $1.68 for every $1 they earn.
With rising home prices not keeping up with income, more of our money is going towards housing and paying down debt, and less is going to disposable income. With consumer debt, it’s more difficult to get pre approved for a mortgage, and with interest rates rising and the stress test still in effect, your TDS (Total Debt Service Ratio – which the banks use to determine what price of home you can afford), will be squeezed harder (unless you’re going to a credit union).
This effect, will keep more people in their homes in 2019, and perhaps more Buyers on the side lines until they can save enough for a down payment. Those that have good credit are finding ways to put less then 20% down on a home, so they can reap the long term benefits of getting into the housing market now.
HELOC (home equity line of credit) Rules have also been reinforced by some banks so far this year, making it more difficult for people to borrow from their own homes, and subsequently putting themselves in more debt. This is a good thing for a lot of people, especially as interest rates are rising.
Won’t be a deal breaker in 2019
Interest rate increases have been a little scary for some Canadians. They’ve gone up 5 times since the Summer of 2017.
It’s a harsh reality that a .25 increase could lead you to be paying $50 or over hundreds of dollars more a month on your mortgage. We have been ‘lucky’ in the past few years compared to the 80’s when people were paying almost 20%!!!! ewwwwww. So although I have received that dreaded letter from Scotiabank a few times this year, I remind myself that in the grand scheme of things, they aren’t as high as they could be. The question is WILL they get higher?
Some industry leaders predict it will rise another point, or more in 2019, but it’s hard to fathom that with the Canadian government being in more debt then they ever have, will be able to pay their debt! If interest rates increase for consumers, they also rise at the banks where the government borrows their money from. Will the government be able to pay their MASSIVE debts if interest rates rise again? I predict a couple more increases, but they could even come back down in 2020 and beyond, if the government realizes it’s unsustainable, for everyone (including 1st time home buyers trying to get into the market!). It’s also note worthy to mention that oil prices in Canada have been taking A LOT longer to recover, which may take a significant toll on our economy (by costing our economy $100 Million a day!)
Raising interest rates have not stopped people from wanting to buy a home. Sure it’s stopped them if the bank says they can’t, but the desire to be a homeowner runs deep in Canadians.
Interest rates can essentially be offset by home buying decisions.
For example, you can’t afford to live in the location you want? You’re not the only one! Lots of people are moving to the suburbs for more affordable living arrangements. You can’t change home prices, but you can change your list of needs and wants in a home.
We all hung on tight as the real estate market in the Hamilton Burlington area had it’s high’s and low’s in the past couple of years, but now, the stress test implications are finally settling in, and Buyers are getting pre approved before house hunting, making the housing market more understandable, and steady.
Overall, sales may fall to the lowest level we’ve seen in a decade, according to CREA (LINK), but prices should rise, at least with inflation. Hamilton Burlington is an extremely desirable place to live for soooo many reasons, which is why our home prices increased more then anywhere else in Ontario in 2018. I predict not much will change in 2019 in our area. We will keep quite steady with people trying to get into the housing market, first time home sellers reaping amazing equity from buying a few years ago and moving up now, and downsizers selling their large homes to move to the burbs, or get a condo. Environmental materials and Smart Home Electronics will also be more prevelant in Canadian households.