Home prices in Hamilton have risen 10 per cent over the past four years, according to a new report that says the price of homes has climbed 17 per cent across Ontario.
The Municipal Property Assessment Corporation, which tracked home sale prices in Ontario between Jan. 1, 2008, and Jan. 1, 2012, said the figures are good news for Ontario homeowners as they suggest a strong real estate market.
“Increasing property values reflect positive economic circumstances,” said MPAC’s chief assessor Larry Hummel.
However, rising home prices make it difficult for first-time homebuyers to enter the market and many in some of Ontario’s most expensive cities, such as Toronto, are opting for condos, a market that many economists have warned could soon be at risk of a downturn.
The figures in the report reflect average price trends in local markets, which can vary greatly.
“Hamilton has experienced steady, measured growth in residential real estate prices as its economy continues to diversify and employment increases, according to Cameron Nolan, President of the Realtors Association of Hamilton-Burlington,” reads the MPAC report.
To illustrate the 17 per cent average provincial increase, the report said if a property sold for $350,000 on Jan. 1, 2008, the average sale price for that same property on Jan. 1, 2012 would be $409,500.
“This is a reflection of obviously a lot of sale data,” Hummel said of the report’s figures.
The report noted some of the most significant growth in Ottawa and in cities in northern Ontario.
The country’s capital saw home prices rise 24 per cent over the last few years, according to the report, which notes the city has a stable and fairly diverse economy that contributes to a steady increase in prices.
Meanwhile, in northern Ontario, the report found a 29 per cent jump in home prices in the Timmins area, a 25 per cent increase in the Sault Ste. Marie area and a 19 per cent rise in sale prices in the Sudbury area.
Higher resource prices that contributed to a mining boom and the diversification of local economies are behind the price increases in the north, said Hummel.
Population increases related to the mining industry have been driving infrastructure development and have had a ripple effect on the real estate market, he said.
“The north is coming off a very low base,” he said. “Their house prices — up until this last five- or six-year period — were very low relative to the rest of Ontario.”
Those home prices are still comparatively lower than those found in southern Ontario, the report notes. In Sault Ste. Marie, for example, an 1,100-square foot bungalow sold for an average of $152,616 in 2011.
Further south, the report found average home sale prices in Toronto jumped 23 per cent over the four-year period.
The report points to an upward trend that some warn is approaching the state of the real estate market south of the border before the global recession hit in 2008.
“Certainly, a house price going up by 17 per cent over the last four years, the average, is a high rate in the environment we find ourselves in,” said Liberal MP John McCallum, a former Royal Bank chief economist.
“And if you look at international comparisons of house price-to-income ratios, Canada is among the higher levels around the world, and we are approaching now levels of house prices relative to income similar to what existed in the U.S. prior to their bubble.”
Other municipalities saw more modest increases, with home prices in London rising 7 per cent and those in Barrie increasing 6 per cent over the same four-year period.
MPAC analyzed actual sale prices of similar properties to help establish the assessed value of residential properties. The location, quality of construction, lot dimensions, any renovations or additions, as well as number of bathrooms were some of the factors that played into a property’s assessment.
The report released Tuesday was MPAC’s first such document on residential sale price trends, which Hummel said is laying a foundation for a home price assessment update later this year.
One of MPAC’s goals with the report was to take the temperature of the Ontario real estate market so homeowners are better informed.
“We want to give them a sense of where the price for their home is heading,” said Hummel. “We wanted to make people aware of what is going to happen in the marketplace.”
The Canadian Press