QMI AGENCY

Own­ing your own home became slightly more afford­able in the third quar­ter of 2011 thanks to con­tin­u­ing low inter­est rates, accord­ing to RBC’s lat­est study on hous­ing affordability.

The afford­abil­ity mea­sure cap­tures the pro­por­tion of pre-tax house­hold income that would be needed to ser­vice the costs of own­ing a cer­tain type of home. In the third quar­ter, that index fell for all cat­e­gories of housing.

“Hous­ing afford­abil­ity lev­els are quite good in most parts of Canada and will pose lit­tle threat to over­all hous­ing demand,” said Craig Wright, senior vice-president and chief econ­o­mist. “The Vancouver-area mar­ket con­tin­ues to be a major excep­tion, with sky-high prop­erty val­ues in upscale neigh­bour­hoods mak­ing it both extremely unaf­ford­able and the most at risk of
a down­ward correction.”

The uncer­tainty affect­ing the global econ­omy, with Europe mired in a debt cri­sis, is help­ing to keep inter­est rates close to his­toric lows. Rates are unlikely to rise until the mid­dle of next year, and even then only grad­u­ally, RBC said.

The cost of own­ing a detached bun­ga­low dropped in most major cities in the third quar­ter, with the excep­tion of Toronto and Cal­gary, which ticked higher.

Although over­all afford­abil­ity improved slightly in the three months to Sep­tem­ber, hous­ing costs in Toronto, Mon­treal and Ottawa are also in an “uncom­fort­able” range.

“We expect to see fur­ther slow­ing in the pace of home price increases next year, as hous­ing demand lev­els out,” said Wright. “These fac­tors will set the stage for a period of rel­a­tive sta­bil­ity in afford­abil­ity trends in Canada.”

Accord­ing to the index, the higher the read­ing, the less afford­able it becomes to own a home.

For exam­ple, an afford­abil­ity read­ing of 50% means that home-ownership costs, includ­ing mort­gage pay­ments, util­i­ties and prop­erty taxes, take up 50% of a typ­i­cal household’s monthly pre-tax income.

The index in Van­cou­ver stands at 90.6%, Toronto 52.1% and Mon­treal 40.9%.

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Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.
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