Toronto Loft Conversions

Toronto Loft Conversions

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Modern Toronto Lofts

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Unique Toronto Homes

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Condos in Toronto

Condos in Toronto

I started off selling mainly condos, helping first time buyers get a foothold in the Toronto real estate market. Now working with investors and helping empty nesters find that perfect luxury suite.

Toronto Real Estate

Toronto Real Estate

For all of your Toronto real estate needs, contact Laurin. I am dedicated to helping you find that perfect and unique new home to call your own.

 

Toronto real estate: ‘Renewed vigour’ in housing market straining affordability

Costs of carrying a house starting to push up again, RBC report says

Susan Pigg – Toronto Star

Those who’ve been waiting for a lucky break – a downturn in the housing market that could finally bring the cost of owning a house within easier reach – are going to be disappointed by a new RBC Economics report.

Comment: People have been waiting for a downturn for 5 or 10 years now. It really makes me sad that there is so much misinformation out there that leads people to believe that. And in all that time they are waiting, prices are rising. Heck, waiting one year can see a $300,000 property turn into a $320,000 property. Heck, in 24 months it might be $350,000. If they had trouble with $300,000, now they are totally shafted with a property that costs 16% more.

“Renewed vigour” in the Toronto and Vancouver resale housing markets just since spring, along with strong housing starts, have reversed some of the cooling that took place in the second half of 2012, RBC says in its latest housing affordability study.

Comment: No, not really. It is just highlighting the differences in months with different rule changes. When mortgages changes last year, sales seemed to drop drastically – but it was because many buyers could no longer buy. Now, we have months with the same rules to compare, so it looks like the numbers are way up. They are up, but it is not quite what it looks like.

In fact, affordability slipped slightly across most Canadian markets in the second quarter of 2013 over the previous quarter, the report notes.

Comment: Of course, prices rose, as they always do, and mortgage rates went up a bit.

The deterioration was most pronounced in Vancouver. There, the RBC Housing Affordability Measure – the costs of mortgage payments, utilities and property taxes on a benchmark detached bungalow, as a percentage of household income – hit 82.1%, up 2.2% from the beginning of the year after four quarters of improvement.

In Toronto, affordability slipped 0.5 percentage points to 54.5% for the same benchmark bungalow. Affordability also showed “some greater strain,” albeit not excessive, across the rest of Ontario in the second quarter, although “low interest rates have kept affordability within tolerable limits,” said RBC senior economist Robert Hogue.

It also helps that annual house-price gains have slowed over the last year or two from double digits and are expected to stay in the single-digit range for some time, notes Hogue.

(The price of a detached home in the GTA was up 7.6% in July, year over year, to an average $644,313.)

While the costs of carrying a benchmark bungalow in Toronto remain “moderately worse off” than historic norms, the cost of carrying a two-storey home ate up 63.1% of household costs in the second quarter, up 0.2 percentage points over a year earlier.

Condominiums remained the most affordable by far, with costs up 0.4 percentage points to 34% year over year.

“Homebuyers seemed unfazed by the slight deterioration in affordability,” said RBC senior vice president and chief economist Craig Wright, noting that Canadian home sales were up 6.4% in July over a year earlier, when Ottawa imposed tougher mortgage lending rules.

Comment: Well, truly the changes are very little. If we are talking 0.5% out of 54.5%, that means affordability only went down 0.9% – not even 1%. That is a pretty minor change if you ask me. That means a mortgage payment of $2,500 rose to $2,522. Really not a large increase.

Ontario homebuyers, many of whom moved to the sidelines over the last year, appear to be back looking, said Wright.

“Steady gains in home resales since March and firmer demand-supply conditions of late are shifting market psychology back to a more upbeat tone across the province.”

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

Laurin Jeffrey is a Toronto Realtor 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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