Original Article: Your Home: Toronto Star
April 16, 2009
THE CANADIAN PRESS
Home ownership became more affordable for Canadians in the last quarter of 2008, reversing a trend that began four years earlier, according to Royal Bank of Canada.
The RBC Affordability measure tracks how much of a typical family’s pre-tax income is required to pay for different types of housing and expresses it as a percentage.
From mid-2004 to early 2008, RBC found the cost of home ownership consumed a greater and greater portion of family income.
RBC said that trend reversed in the final three months of 2008 – a period that many economists say marked the beginning of what’s become the deepest recession in decades.
The national rating for a detached bungalow, which RBC uses as a benchmark, fell to 43.7 per cent in the October-December quarter – down 2.1 percentage points from the July-September quarter.
Other types of housing also become more affordable, RBC said, with standard townhouse costing 35.4 per cent of family income (from 36.9), the standard condo to 30.1 per cent (from 31.4), and the standard two-story home to 50 per cent (from 52.0).
RBC Economics said the biggest factor affecting the improved affordability in the final three months of 2008 was falling mortgage rates, while improved family income also contributed.
Lower house prices were only a factor in Calgary, Edmonton and Vancouver, which had been among the hottest real estate markets, the bank said.
“Going forward, low mortgage rates and persisting downward pressure on housing prices will continue to help repair affordability although slowing income growth will act as a restraint,” RBC economist Robert Hogue said in a statement.
There were wide variations in affordability depending on the region. A detached bungalow in Vancouver, for example, cost a sky-high 70.3 per cent of family income.
In Toronto, the figure was significantly lower at 51.3 per cent. Calgary’s reading was 42.7 per cent, Ottawa was the same at 42.7 per cent, Montreal was 39.4 per cent.