Source: · CBC News ·
A wide range of pandemic fuelled factors is pushing up prices in Hamilton as buyers look to flee Toronto and the supply of homes for sale isn't keeping up.
This story is the second in a series that marks the 6-month anniversary of COVID-19 hitting Hamilton and will examine its impacts —past and future — on the city. Read the first here.
Late last month, Devan Casson put his one-bedroom bungalow on the Mountain up for sale for $349,900.
Over the next week, 280 people made appointments to view the house. By Sept. 3, Casson's realtor had offers from 32 would-be buyers.
The house sold for $454,900 — $105,000 over the asking price.
Casson's experience was not a blip. The Hamilton for-sale housing market has exploded over the summer, fuelled by the Covid-19 pandemic, even amid economic uncertainty.
And the market promises to be just as competitive for buyers for the foreseeable future, until more people feel ready to list their homes for sale and add some supply to the market.
A number of pandemic-related factors have heated up demand for Hamilton homes: Offices banished employees to their kitchen tables in March, meaning more people from beyond city limits aren't worried about lengthy commutes, at least for now. People who'd sacrificed square footage to live closer to their jobs suddenly craved more space for kids doing schoolwork and playing and parents working. Travel restrictions swapped daydreams of vacations for backyard pools.
Federal economists have lowered interest rates, making larger mortgages more attractive for anyone who can save up a downpayment.
"If people were sitting on the fence about doing something, this finally pushed them," said Conrad Zurini, a local broker.
The change in work dramatically expands the buyer pool for properties to people from all over the Greater Toronto Area, said Kathy Della-Nebbia, president of the Realtors Association of Hamilton and Burlington.
"Those potential buyers who couldn't afford the GTA and wanted the dream of home ownership, but couldn't face the commute, have been given a great gift," she said.
Cool spring into hot summer
The pandemic shutdown did have a dramatic impact on the housing market in March and April, as people largely stayed home and gave some realtors free time in the spring for the first time in memory. Sales were down 63 percent in April compared to April 2019, and 42 percent from May 2019 to May 2020.
But then the market erupted in June, typically when the easy going summer market starts to kick in.
"It did the opposite of what we all expected," said Elizabeth Parker, a Hamilton realtor. "The demand has been ferocious compared to the supply."
In August, Hamilton homes took an average of 22 days to sell, much faster than the 30 days average a year ago. That was even starker in Burlington, where homes spent an average of just 18 days on the market before selling, down from 29 days last year.
Many buyers, fewer sellers
A number known as "months of inventory" is another indicator of how tight a market is. In August, there was just over one month of inventory in Hamilton, meaning if no one else listed their homes, the houses actively for sale could sell out in one month. That's down from 1.6 months for the same month last year, and about half as much as what was available in August 2018 and August 2017, according to the realtors association.
Buyers have seemed to get their confidence back sooner than sellers, Della-Nebbia said.
"It may seem easier and more comfortable for buyers to go into other people's homes, than for sellers to allow strangers into their homes," she said.
More GTA buyers in the pool
That all adds up to a difficult situation for buyers.
In the last couple of months, homes have attracted dozens of offers, eager buyers bidding up prices by more than $100,000.
A house in Rosedale, in Hamilton's east end, had 172 showings and got 15 offers in August, eventually selling for $400,000, or more than 30 per cent over the list price, according to Zurini.
In the southwest of Hamilton's lower city, 63 buyers looked at a house listed for $699,900, with 13 putting in offers. It sold for $885,000, more than 25 per cent over the $699,900 list price, Zurini said.
Realtor Nikhil Bhanwra works mainly with buyers and said the overriding pandemic feeling is to "just stay still in general," which doesn't translate to large numbers of people being interested in selling their houses.
"There's much more limited supply based on fewer people moving around, and I don't think people expected what the shortage meant for the value of homes going up so much," he said.
Casson's realtor, Vince Gratta, said the majority of the clients he's helping to find homes to buy are from outside of Hamilton.
"What I'm finding personally is a lot of Toronto, GTA buyers, more than ever," he said.
Zurini has a button on his website that allows people to plug in their hypothetical commute, if they purchased a particular home. No one is clicking on it.
"That plummeted," he said. "We saw [clicks] going down 30, 40, 50 percent a month."
That sense is borne out in the number of people riding GO Transit trains and buses into work, according to Metrolinx.
Ridership on GO trains from Hamilton between April and July this year was about 10 percent of what it was in 2019, said spokesperson Matt Llewellyn.
By middle-to-late August, ridership on GO trains and buses had risen, but was still just 23 percent of what it was at the same time last year.
'It was just too small'
Lucas Prokaziuk and Elysse Leonard are among the would-be commuters who took another look at Hamilton after buying a condo in the Roncesvalles neighbourhood in Toronto a couple of years ago.
They had house-hunted in Hamilton back then, but their jobs are in Toronto — Prokaziuk works in film and TV, and Leonard works at a non-profit arts organization. When the perfect condo near work popped up, they jumped on it.
But by the time Covid-19 struck, Leonard was on maternity leave with their baby, Agnes, born in January. Suddenly, the prospect of popping out to the park or meeting up with other parents and babies was unthinkable. Leonard stayed inside the condo with the baby for three weeks, not even venturing into the corridors.
They yearned to be closer to Prokaziuk's parents in St. Catharines, and Leonard's in Mississauga. And they were bumping up against the constraints of having one common room for the three of them.
"It was just too small," Prokaziuk said. "We needed a bigger space."
They revived their search in Hamilton. They made unsuccessful offers on two other houses before getting the keys to a century home a couple of blocks east of Gage Park.
The three-bedroom house with usable attic space was listed for $650,000, and they got it for $695,000. They sold their condo in Toronto for $760,000.
It's still unclear what will happen when Covid-19 restrictions lift and Leonard's maternity leave ends. One or both of them may have to commute some or all of the time if work-from-home flexibility doesn't continue.
But the new house has space for each to work, and they decided they didn't want to wait to make a decision based on unknowable future factors.
"We can't really make a decision based on this future because nobody knows what will happen," Leonard said. "So we had to use the information we had. We'll figure it out when we come to it."
Bhanwra was the realtor who helped Prokaziuk and Leonard get their house. He said some of the buyers he works with are getting discouraged with the frenzy of the multiple offer situation. But he said some of the fever in the market comes because of some realtors deliberately pricing low to generate interest.
Parker said the frenzy echoes other times when buyers have been in fierce competition on every house, only for something to suddenly change and bring more houses on to the market to choose from.
She cautions her buyers that losing out on offers, as painful as it can be, isn't the end of the story. And in the end, she tries to help buyers avoid overpaying or getting stuck with a lemon.
"In this time, it always feels crazy and we always think it's never stopping," she said. "Experience tells me that it cannot keep rising like this. I always try to say the sky is not falling. We are going to get our house; we may have to be patient."