Toronto and Vancouver tend to get the most attention when it comes to high home prices. They recently ranked first and second on a list of North America's least affordable real estate markets from Oxford Economics. But they have company.
Hamilton, Ont., has quietly become the third least affordable — even more expensive than U.S. cities known for high home prices like New York and Los Angeles.
The rise in home prices in Hamilton is largely due to people being priced out of Toronto, looking for more affordable options — a trend commonly known as "drive till you qualify." Housing supply that hasn't kept up with immigration is another factor.
A new research paper by Smart Prosperity Institute found Ontario added 80 per cent more residents in 2015-20 relative to 2010-2015, but 2,598 fewer homes were built in Hamilton census metropolitan area (CMA).
"Hamilton is extremely well-positioned as a destination of choice to grow by almost 40 per cent from 584,000 to just over 820,000 people over the next three decades," said Mike Collins-Williams, MCIP, RPP, chief executive officer, West End Home Builders' Association.
"This forecasted growth brings both challenges and opportunities for our region and it is absolutely critical that we plan for the necessary supply of housing to ensure Hamilton rises to the challenge and we don't price the next generation of Hamiltonians out of housing that suits their full life-cycle needs."
Priced out of Hamilton real estate
And now the shoe is on the other foot because the research paper finds a lack of affordable housing is forcing people to leave Hamilton too and they are mostly young people.
It found 13,000-15,000 residents left the Hamilton community between 2015 and 2020 due to a lack of housing. Between 2016 and 2019, over 10,000 went to St. Catharines-Niagara, Brantford, and rural Ontario.
Not being able to live in a city that one works in, or near friends and family is tough for homebuyers. It costs the city millions in lost tax revenue. But Mike Moffatt, senior director of policy and innovation at Smart Prosperity Institute, says there are other less obvious effects.
"Hamilton is a vital centre for clean innovators, but too many working families cannot find a place to call home in the community. By building an adequate supply of housing, we can help families live closer to where they work, and ensure local companies can attract and retain the talent they need," said Moffatt.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.