SUSAN PIGG/TORONTO STAR

HAMILTON—Cathy Thomson always imagined that when she and her husband retired, they would sell their house in Oshawa and move to the big city.

They did. The City of Hamilton.

The former librarians were shocked to discover that for about half the price, $295,000, they could get everything they’d hoped to find in Toronto — a cool condo close to a burgeoning arts scene, thriving cafes, up-and-coming restaurants, and bike paths that meander along a waterfront undergoing a rebirth.

With any luck, all-day GO train service, originally slated for the 2015 PanAm Games, will arrive someday within a 10-minute walk of their new home, a soaring and sunny 1,200-square-foot condo in a beautifully converted, century-old school.

Thomson, 57, and her husband Rick Ficek, 67, never intended to become cheerleaders for Steeltown — a city they barely knew, or thought they’d even like, until they got past the aged smokestacks and strolled through its tree-lined historic central neighbourhoods.

There they discovered elegant, and sometimes unloved, brick Victorians, charming workers’ cottages and even Rosedale-like mansions. And they were all shockingly affordable — at least by Toronto’s sky-high standards.

But prices here are now growing at a rate outpacing almost every other city in Canada. Locals largely blame “real estate refugees” from the GTA, and too few listings to meet the growing demand. Prices in the region rose 12.8 per cent in May over a year earlier, more than three times the national average.

The historic southwest part of the city core, the up-and-coming Bayfront area overlooking the revitalized Hamilton Harbour, and the streets, like Thomson’s and Ficek’s, in the area west of St. James St. N. are also in hot demand from international medical experts, researchers and even investors, says Bruce Moran, president of the Realtors Association of Hamilton-Burlington.

And with that demand come the hallmarks of a hot market: More realtors holding back offers or underpricing properties to fuel bidding wars, and higher prices, which last month averaged $416,664 in Hamilton-Burlington, up from $369,292 a year ago, according to the Canadian Real Estate Association.

Veteran realtors still shake their heads as they drive past a 2½-storey west-end home that recently sold for $471,250 — more than $170,000 over the $299,900 list price.

“There is a lot more going on here than meets the eye,” says Keanin Loomis, 38, president of the Hamilton Chamber of Commerce, who was a Rochester, N.Y., lawyer until 2009.

“The minute I moved here I felt like I was in on Canada’s best-kept secret. I always said I didn’t want that to get out until I’d bought a house.”

He did, last February, in what realtors have dubbed “the trendy Locke St. area,” for $32,000 over the $349,000 asking price in an eight-person bidding war.

All-day GO train service had been expected to further fuel the real estate boom by creating “a 45-minute iPad ride,” in the words of local realtor Juliana Webster, between affordable homes and Toronto jobs. Right now there are some trains during rush hour and buses the rest of the day. By the time the PanAm Games begin, GO will expand train service during rush hours.

“The big challenge is having people look down their nose at you when they find out you have moved to Hamilton,” says Webster, formerly of Montreal. “But that’s changing. Once people see what Hamilton has to offer, we find they go home and tell their friends, so the word is getting out.”

Last year was another record-breaking one for Hamilton, population 520,000, which, in less than a decade, has re-engineered itself from a struggling blue-collar industrial town into one of the most surprisingly diversified urban centres in the country.

It’s been voted one of the best places to invest in Canada by numerous publications, building permits have averaged over $1 billion in each of the last four years and the Conference Board of Canada deemed it the fastest-growing economy in Ontario this year, at 2.5 per cent.

Empty storefronts are filling up again, especially along gritty James St. N., where creative industries and artists have largely led the renaissance.

There’s been an explosion in medical services and research jobs, Mohawk College has expanded and so has McMaster University, which has been lauded for its MaRS-like Innovation Park, home to the McMaster Automotive Research Centre. Mac’s new medical school will open in the heart of the downtown by early 2015.

“That’s going to be a game changer,” says Neil Everson, Hamilton’s director of planning and economic development. “It will bring a lot more people downtown and add a lot of activity.”

It’s also expected to add to the city’s mini boom in condos.

Thomson and Ficek are still unpacking from their June 3 move. They’ve bought bikes, met a few locals and checked out the monthly James Street North Art Crawl with their daughter, who lives in Toronto and is keen to see more of Hamilton.

The retired librarians’ biggest challenge, so far at least, has been figuring out what to do with their 11,000 books.

Custom shelves are on order, but Ficek is toying with another idea: Opening a used bookstore.

Compare Hamilton to the steeltown down south, say Buffalo City where I am sure you still can find bargains for as little as $50,000 … Guess this will be one of the stories to be filed under “What are they thinking ?” in the future ?

For example, you actually can still get a real home (not condo) in Buffalo like this one for as little as (there are cheaper ones on the main streets in downtown Buffalo, I am sure) …

Price: $48,900

51 Pleasant Pkwy Buffalo, NY

Beds: 2 Bath: 2 Sq. Feet: 1,365