(905) 545-1188   

Net worth in Hamilton growing faster…

Posted: August 5, 2013

965473_394069944039173_1137428714_o

 

Net worth in Hamilton growing faster than in most of Canada

A new report says Hamilton families are getting richer faster than most of Canada.

The report by Environics Analytics, to be released Friday, concludes Hamilton experienced the second-fastest growth in net worth among major cities last year.

Net worth grew by 9.5 per cent to $420,515 compared with a national average of 5.8 per cent. Nationally, net worth topped $400,000 for the first time in history — but only by $151.

Net worth is the value of everything a family owns or has saved minus what it owes.

Local economy watchers, however, warn the number should be read cautiously, noting it’s an average that could be skewed by a number of wealthy people getting richer, while the majority of the population sees little improvement in its situation.

“It really is a surprising number,” said Neil Everson, the city’s director of economic development. “We shouldn’t lose sight of the fact we still have a real disparity between the richest and poorest people in Hamilton.”

Most measures of Canadian household finances have focused on the all-time high levels of debt, which in the past year have topped 160 per cent of disposable income, one of the highest ratios in the world.

Analysts note, however, that along with a lot of debt, Canadians hold real assets, particularly the highest level of home ownership in history. Home prices in most parts of Canada have steadily risen despite a weak economy, and equity markets have recovered most of the losses sustained during the 2008-09 recession.

Marvin Ryder, of McMaster University’s business school, said wealth increases here are likely being driven by real estate and the value of investments, including pension plans.

“After the recession, pension plans lost 25 to 30 per cent of their value, but today the well-managed ones are increasing by 10 per cent,” he said. “At the same time the value of homes in Hamilton is rising.”

That’s backed up by the latest figures from the Realtors Association of Hamilton Burlington showing that while year-to-date home sales and listings have slipped compared with last year, the average price of a local home continues to rise.

Earlier this month the board reported year-to-date listings were down 1.1 per cent and sales were down 3.3 per cent compared with the same period last year. Average sale prices were up 7.7 per cent.

The average price of a home in Hamilton-Burlington in June was $397,374.

Bruce Moran, president of the realtor’s association, said a major force shaping the local market is increased demand driven by “housing refugees” from Toronto who’ve learned they can get more house for their money here.

fall in net worth.

“Personal debt levels are still one of the things that keep me awake at night,” Everson said. “We see people putting a lot more money into real estate.”

The Environics study concluded average household debt in Canada grew at relatively modest

3.3 per cent last year.

Mayor Bob Bratina took the numbers as a sign the city’s economy is on the right track.

“This is a further indication that Hamilton is trending in a positive direction with respect to financial performance,” he said. “The reference highlights the impact of real estate values on net worth, as Hamilton has a significant portion of our citizenry that rent, it is important that these individuals experience increases in their liquid assets and that they have access to gainful employment. Hamilton’s relatively low unemployment rate is a further positive indicator.”

Bank of Montreal chief economist Doug Porter says about half of household net worth is attributed to real estate values.

wealth tied up in real estate, Everson and Ryder both say they’re worried about the impact of a sharp increase in mortgage rates that causes prices to either stop rising or even to fall.

Ryder also wondered what impact Hamilton’s rising reliance on public-sector employment may have on the net worth number.

Canadian Press