Hamilton among 7 Canadian cities seeing drop in home prices: report

Upinder Dhillon is ready to buy a house. 

The small business owner and aromatherapist lives in a rented home with her husband and son in Oakville, Ont., and she's been scanning listings for a single-storey house near a body of water — and preferably within a short drive to Mohawk College, where her son begins a trades program in September.

"Hamilton is my first choice," said Dhillon. "It's more affordable than Oakville or Burlington. And honestly, it has everything — trails, the waterfront, shopping."

Dhillon's timing may be just right. New data from Ratehub.ca shows Hamilton led the country in improved "mortgage affordability" in April, with the average price falling nearly $10,000 to $801,400. That means a buyer now needs $1,800 less in income to qualify for a mortgage on a typical home in the city, compared to what was previously needed, according to Ratehub.ca.

Hamilton was one of seven major cities in Canada, out of 13, that saw improvements in mortgage affordability last month, according to the data, released on May 22. 

"Since mortgage rates remained unchanged [in April], home prices were what impacted home affordability in each of the cities," said Penelope Graham, a mortgage expert at Ratehub.ca, in a news release. 

According to Graham, sluggish home sales, an uptick in supply and buyer caution are helping push prices downward, particularly in Greater Golden Horseshoe markets like Hamilton and Toronto. Other cities that saw housing prices — and the amount of income needed to afford a mortgage — drop last month include Vancouver, Fredericton and St. John's. 

Meanwhile, prices went up in some cities, such as Regina, Montreal and Victoria.

1st-time buyers entering the market

Dhillon, who plans to buy largely in cash using proceeds from a property sale overseas, said a dip in price could be key for her and her family. 

"Interest rates are still high, and qualifying for a mortgage is tough when you run a small business," she said. "But this feels like a good time to buy."

Mortgage broker Emily Miszk, based in Port Credit west of Toronto, said the change comes down to basic math.

"If home prices are coming down, clients need a smaller mortgage — which means they need less income to qualify," she said.

But she emphasized the Ratehub report reflects a shift in the cost but not a change in who can quality for a mortgage.  

Conrad Zurini, a broker at RE/MAX Escarpment Realty in Stoney Creek, said he's already seeing a shift.

"We're seeing more lower-priced inventory being sold, which is pulling down the average price," he said. "But it's also a sign that first-time buyers are finally making their move."

Zurini told CBC Hamilton the sales-to-new-listings ratio — which compares homes sold to new listings — rose from 32 to 40 per cent last month, signalling growing momentum. "Buyers are taking advantage of lower long-term mortgage rates and price stabilization," he said. 

Where prices are falling — and rising

Real estate broker Nanda Puchimada, who recently helped a client buy in Hamilton, said price drops are consistent across the GTA, but vary by housing type.

"The steepest declines are in high-end detached homes," he said. "Properties over $1.5 million have seen the biggest hits, while condos and townhouses have dipped more modestly."

An outlier? Stoney Creek, in east Hamilton. "Semi-detached homes there actually went up by about 10 per cent," he said.

A trend Puchimada is watching closely: collective buying. "We're seeing more multi-family purchases — siblings, cousins, even work colleagues pooling resources to buy together. It's something we didn't see as much before."

Both Puchimada and Zurini say investors are backing off, especially from entry-level properties, as returns shrink and renovation costs remain high.

Meanwhile, inventory is rising.

"Hamilton has seen a 30 to 35 per cent jump in listings," said Puchimada. "A lot of that is due to upcoming mortgage renewals. Owners who locked in low rates a few years ago are now facing much higher payments."

Policy suggestions to support buyers

Zurini believes targeted policy changes could help turn hopeful buyers into homeowners. His suggestions for all levels of governments for how to help: 

• Extend mortgage amortization periods (e.g. 35 years for new buyers with conditions, gradually reduced over time).
• Increase RRSP withdrawal limits for home purchases (the Home Buyers' Plan in Canada allows eligible first-time homebuyers to withdraw up to $60,000).
• Offer down payment assistance programs.
• Reduce or eliminate the provincial portion of the land transfer tax.
• Remove the provincial sales tax (PST) on CMHC mortgage insurance for high-ratio mortgages.

"Right now, people are stuck renting while they try to save for a down payment. If we help them get in sooner, they can start building equity," Zurini said. 

For Dhillon, who continues her search for a house in Hamilton, the choice is clear: "I just want a place to call mine."