Residential Market Commentary - Affordability improves, a little
Housing affordability got a little better in Canada in the first quarter of this year, but not so much that anyone would really notice.
The latest report from one of the country’s big banks shows a 0.3 percentage point drop in its affordability measure for Q1. It is a small reduction but it marks the second straight quarter of decline. The measure now puts the cost of home ownership at 51.4% of household, pre-tax income, including mortgage payments, utilities and property taxes.
The report cites “policy-engineered market downturns” for the improvement in affordability. It also points out that those downturns have not happened where they would have the greatest impact, namely Vancouver and Toronto. Cost of ownership in the GTA clocks-in at 66%. In Vancouver it is a staggering 82%, even after a 2 percentage point drop in the first quarter.
Victoria and Montreal are also showing up as hot spots. Even though Victoria saw affordability improve by a full percentage point, it still stands at 58.6%. Montreal is 44.3%; steady for the last two quarters but up from the long term average of 38.6%.
Encouragingly the report notes that, in nine of the 14 markets tracked for the survey, between 46% and 56% of families “would be able to cover the cost of owning an average home.”