fundamentallyspeaking
HOMEOWNERSHIP AFFORDABILITY improving for Calgary by WAYNE KARL
WAYNE KARL is an award-winning writer and editor with experience in real estate and business. In Fundamentally Speaking, Wayne explores the basics – such as economic fundamentals – you need to examine when buying property. He can be reached at wayne.karl@wall2wallmedia.com or follow him on Twitter at Twitter.com/WayneKarl
markets in the country, thanks in part to the high household market conditions, high levels of household debt and eco- income in the province. Homeownership affordability imnomic uncertainty, comes some good news, courtesy of proved in all housing categories during the first quarter of RBC Economics Research. Canada’s housing affordability 2013 compared to last year, in detached bungalows to 32.2 was generally in a holding pattern in the first quarter of per cent, standard two-storey homes to 34.7 per cent and 2013, thanks primarily to mortgage rates, home prices and in condos to 19.8 per cent. For the Calgary market, specifically, two-storey homes household incomes remaining at status quo, according to and condos both improved – down 0.4 per cent (meaning RBC’s latest Housing Trends and Affordability report. “The Canadian housing market cooled significantly in the it became more affordable) to 38.8 per cent for two-stories, past year; however, there is mounting evidence that activity and down 0.3 per cent to 22.9 per cent for condos. Affordis no longer weakening,” says Craig Wright, senior vice- ability deteriorated slightly in detached bungalows, rising president and chief economist, RBC. “A significant nation- 0.2 per cent to 38.7 per cent. wide price correction does not appear to be imminent so long as affordability remains outside of the danger zone.”
AMID ALL THE RECENT TALK OF WEAKENING
The Canadian housing market cooled significantly in the past year; however, there is mounting evidence that activity is no longer weakening Exceptionally low mortgage rates have been the chief factor in keeping homeownership costs relatively affordable, RBC says. The Bank of Canada again held its trend-setting bank rate at one per cent on May 29. RBC notes that when interest rates eventually rise, it will be because the Canadian economy is on stronger footing. Alongside this stronger economic environment will be heftier household income gains, which would work to offset any negative impact on affordability, RBC says. The way RBC’s affordability measures work is, the higher the measure, the more difficult it is to afford a home. For example, an affordability measure of 50 per cent means that home ownership costs, including mortgage payments, utilities and property taxes take up 50 per cent of a typical household’s pre-tax income. A decline in the measure represents an improvement in affordability. The Alberta market continues to be a bright spot in Canada, RBC says, remaining one of the most affordable 44 NEW HOME GUIDE | JUN 21 - JUL 19, 2013