Hamilton: Sales remain below the long-term trend
Hamilton maintains its spot in the top three for improved affordability, though there are clear signs that buying activity is rapidly heating. According to the Cornerstone Association of Realtors (formerly the Realtors Association of Hamilton-Burlington), home sales increased for the second consecutive month, as rate cuts incentivized local home buyers. However, the association points out that the market has softened more toward balanced conditions, as supply remains abundant. The average home price in Hamilton dropped by $10,600 month-over-month to $820,900, lowering the required income for local buyers by $4,060.
Canadian cities where affordability worsened
Just one Canadian city saw affordability worsen during the month of October:
Fredericton: A strong surge in sales
Fredericton was the only city that saw affordability worsen, with $1,890 more income required to purchase the average home. This was due to the significant month-over-month home price increase of $16,100, bringing the city’s average to $328,100. This was driven by a strong uptick in sales in October:year-over-year activity came in 12% higher across the province, leading to the same-sized increase in the benchmark home price. That was enough to offset the effects of lower mortgage rates, making it slightly tougher to buy a home in the east coast city.
How much mortgage can you afford? How much house can you buy?
This monthly report reflects how real estate market conditions, coupled with shifts in borrowing costs, impact overall affordability for home buyers. If you’re looking to get your first starter home, or perhaps move up to a larger property, crunching your own affordability numbers using the MoneySense mortgage affordability calculator is a great way to get an idea of what your monthly payments will be.
Will housing affordability continue to improve for Canadians?
It’s highly anticipated that Canadian mortgage rates will continue to trend downward,but it’s unclear by how much. Whether or not inflation continues to lower will be key in determining the BoC’s next steps. The latest inflation numbers for the month of October show the Consumer Price Index (CPI) rose to 2%, up from 1.6% in September.
That increase has made market watchers uneasy, as any upward movement could delay further rate cuts from the BoC. However, as 2% is within the Bank’s target inflation range, another rate cut is still likely to come in its next announcement on December 11.
Economists are still undecided as to how big this rate cut could be. RBC economists have called for another 50-basis-point cut to come in December, as they believe inflation is “more likely to drift broadly lower in Canada.”
Meanwhile, Doug Porter, BMO chief economist and managing director of economics, thinks the BoC will play it safer with a quarter-point cut, as the “core” inflation measures—those most closely watched by the bank—did increase more than expected.