Affordability eases for some

Michael Babad – The Globe and Mail

Owning a home still appears be out of reach for many people in Toronto, but sky-high prices don’t seem to be stopping buyers in Vancouver.

Comment: With Toronto sales and prices still rising, we are not stopping here either.

And in Calgary, the other of Canada’s three hot cities, it’s full steam ahead.

Across the country, home affordability eased slightly in the third quarter of the year, according to a Royal Bank of Canada study released today.

But Canada, of course, isn’t just one housing market given the wide divergence.

Comment: No kidding!

“Carrying the costs of ownership became a little lighter for the majority of housing types thanks to small reductions in utility costs in many parts of the country, low and steady interest rates, and broadly rising household income,” RBC chief economist Craig Wright and senior economist Robert Hogue said in today’s report.

“Even markets such as Toronto, where affordability eroded persistently in the past four years, saw relief,” they said in the study, which looks at prices and income, among other things.

“The same could not be said for Canada’s other currently ‘hot’ markets, Vancouver and Calgary,” they added, though they noted that affordability “remains quite attractive” in the latter.

The pressures are largely in Toronto, where affordability is “the most stretched in Canada,” and Vancouver, where there are “extreme conditions.”

Toronto got some relief but “owning a home – especially a single-detached home – at market price still appears to be a stretch for a typical household in the area,” said Mr. Wright and Mr. Hogue.

Comment: Which is why so many people are looking to semis and towns, or moving into new neighbourhoods.

“That being said, any affordability stress does not seem to bother homebuyers, however. Toronto-area home resales continued to power ahead in the third quarter.”

Where two-story houses are concerned, affordability eased by 1.1%. For condos, less so.

In Vancouver, in turn, affordability has been “severely strained” for almost 10 years, but that doesn’t seem to be “holding back home buyers in any significant way.”

Resales, they said, topped the 10-year average this year, rebounding from the last two years, leading to a market where “sellers once again hold the upper hand in setting prices.”

And then there’s Calgary, Canada’s hottest market, where everyone has a lot of many, anyway, so why not?

“Calgary prices continue to rise at the fastest pace in Canada (between 9% and 12% year over year depending on the housing type),” said the RBC economists.

“Housing affordability deteriorated in the third quarter; however, it remained quite attractive from a historical perspective and in comparison to other Canadian cities.”

The International Monetary Fund, too, weighed in today on Canada’s real estate market, saying in its look at the economy that housing “regained momentum,” though with distinctions across the country.

It, too, highlighted the “brisk activity” in Toronto, Vancouver and Calgary, and welcomed new measures to bolster mortgage insurance.

“Housing demand from household formation and population growth, combined with supply-side constraints from land-use policies and geographical factors, may partly explain fundamental strength in these major real estate markets,” the IMF added.

“Across market segments, single-family homes are a major source of price increases, and there are signs of overvaluation, especially associated with high-end buyers (reflected by uninsured mortgage credit growth).”

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.
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