Hamilton home sales and prices dropped in April as interest rate hikes hit would-be buyers

Higher interest rates may have thrown some cold water onto Hamilton's red-hot housing market.

The Realtors Association of Hamilton-Burlington (RAHB) reported Tuesday that house sales in the region slumped to 1,298 last month - falling by nearly 21 per cent compared to March, and down more than 31 per cent from the same time last year.

The two reasons for the pause are increased interest rates and these pre-approvals that don't exist anymore or are expired," said RAHB president Lou Piriano in an interview Wednesday. And I think we'll see more of this going forward."

For the second month in a row, the average price of homes also decreased across all property types in the region.

Those looking to sell should anticipate that their homes could sit on the market for longer than expected due to both additional supply and retreating would-be buyers who have been scared by anticipated rate hikes, Piriano said.

Compared to March, the average sale price for a detached home fell by more than four per cent to $1,135,779, townhouses dropped by nearly seven per cent to $865,862 and apartment-style homes fell off by more than six per cent to $647,411.

Across the market, the average sale price for a residential property declined by more than five per cent to $1,013,081 - which is still a more than 18 per cent jump from the same last year.

The Hamilton-Burlington market isn't the only one experiencing the fallout of higher interest rates, noted Piriano.

The Toronto Regional Real Estate Board reported sales were down more than 41 per cent year-over-year, with a tumble of 27 per cent from March.

Usually, they're the bellwether," said Piriano. They generally signal a lot of what's going on."

Locally, the number of sales declined across all property types, according to the association.

Month over month, detached properties were down more than 21 per cent, townhouses fell by around 28 per cent and apartment-style properties slipped nearly 11 per cent.

That decline in sales, however, has boosted the area's critically low inventory levels, noted Piriano.

The number of new listings coming to market also surpassed that of every other April in the last decade, with the exception of last year, according to the association.

Piriano noted that while the market is showing signs of becoming more balanced," inventory levels are still way below" that of a balanced market. However, buyers are now seeing more choice in the market.

The supply issue facing the region won't be going away any time soon, said Conrad Zurini, broker of record at RE/MAX Escarpment Realty Inc.

He said new supply coming onto the market typically consists of smaller units, which are often too small and don't fit the needs" of even those buyers looking to downsize.

There is not enough inventory coming on the market," said Zurini, in an interview. And once a product comes to market that a group of buyers are looking for, it gets snapped up quite quickly."

Fallon Hewitt is a reporter at The Spectator. fhewitt@thespec.com