Calgary listed as one of the more affordable housing markets in Canada

Great headline for sure. 1 RBC report has 2 articles written about it below.


Calgary listed as one of the more affordable housing markets in Canada

RBC report says city market experiencing a ‘renaissance’

CALGARY — Calgary experienced a housing market renaissance in 2012, reaping the benefits of strong provincial GDP and in-migration, which propelled home resales in the area, says a report released Monday by RBC Economics Research.

The latest Housing Trends and Affordability Report listed Calgary as one of the more affordable housing markets in Canada.

“Calgary-area buyers enjoyed significantly lower home ownership costs as a share of income than they faced at the market peak in early 2007 and the bar fell even further in 2012,” said Craig Wright, senior vice-president and chief economist of RBC. “In fact, it is the only major city in Canada where RBC measures are lower than their historical averages, suggesting that Calgary is one of the more affordable markets in the country.”

Thanks to improvements in previous quarters, all RBC measures stood below their previous-year levels in the fourth quarter. There was some minor deterioration in the latest period, however, with the measure for detached bungalows rising by 0.2 percentage points. But the measure for two-storey homes remained flat, and that for condominium apartments fell by 0.1 percentage points.

The RBC housing affordability measures capture the pre-tax household income needed to service the costs of owning a home at market values.

In Calgary, the average price of a detached bungalow in the fourth quarter of 2012 was $440,600 and the affordability measure was 38.1 per cent. The average price for a standard two-storey home was $434,700 with a measure of 38.6 per cent and for a standard condominium the average price was $250,100 with a measure of 22.2 per cent.

“It’s an exciting time for buyers, borrowing is very affordable right now. I’m seeing this affect the first-time homebuyer and investor market the most lately,” said Shayna Nackoney-Skauge, realtor with RE/MAX Rocky View Real Estate.

“Last week we listed a house that is in relatively original condition in the Varsity area. Within the first eight hours we had 15 showings and two offers. Buyers are flocking to scoop up new competitively-priced listings and investors are quick to pick up well-priced homes for their lot value in high-demand inner-city areas. It’s definitely keeping us on our toes to keep up with what is coming on and off the market on a daily basis.”

RBC said Alberta’s housing market remained vibrant in the final quarter of last year, buoyed by attractive affordability levels, accelerating population growth, a healthy labour market and a strong provincial economy. Although the pace of home resales slowed in the closing months of 2012, the housing market tightened up as fewer properties were listed for sale, it said.

“While homes are not particularly cheap in the province, Albertans boast the highest household incomes in Canada, which helps ensure that the share of their budget taken up by home ownership costs is easily manageable,” said Wright. “Barring an unexpected shock to the economy, housing market conditions in Alberta should remain positive in 2013.”

The RBC housing affordability measures for the province fell across all three housing types tracked by RBC. RBC’s measures for the benchmark detached bungalow and the standard two-storey fell by 0.2 percentage points to 32.1 per cent and 34.7 per cent, respectively. The measure for condominium apartments fell by 0.1 percentage points to 19.7 per cent. Average prices were: bungalow, $357,900; two-storey, $378,800; and condo, $213,300.

Nationally, affordability measures dropped by 0.2 percentage points for both bungalows (42.1 per cent) and condos (28.0 per cent) and by 0.3 percentage points for two-storey homes (47.8 per cent). Average prices in Canada in the fourth quarter of 2012 were: bungalow, $363,400; two-storey, $410,600; and condos, $237,600.

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Low mortgage rates muster slight boost in housing market affordability


PublishedMonday, Feb. 25 2013, 5:00 AM EST

Owning a house became slightly more affordable in Canada during the second half of 2012, but that’s mostly due to rock-bottom mortgage rates, RBC Economics says in a report to be released Monday.

The sharp drop in house sales that occurred during the final six months of the year led to some small month-over-month declines in house prices in many cities. And, as sales fell, banks made further small cuts to their already-low mortgage rates. Those two factors helped to take a tiny bite out of the cost of home ownership during the final three months of the year, for the second quarter in a row, RBC says.

The report comes as economists debate the health of the housing market and whether the moves that Ottawa made to tighten the market last summer will continue to have an impact this year.

On Friday, BMO Economics said that the latest data suggests falling mortgage rates and rising incomes are offsetting the effects of high house prices in most markets. That report said that affordability is not a “major problem” in most of the country, including Toronto’s much-watched condo market, and that it should not become one even when rates hit more normal levels.

“If interest rates remain low, income continues to rise, and prices stabilize this year – as we anticipate – fears of a deep housing correction should recede,” BMO senior economist Sal Guatieri wrote in that report. But he urged policy makers to “remain vigilant,” pointing to a number of major exceptions, namely the markets for detached homes in Vancouver, Toronto and Victoria, each of which are vulnerable to a significant correction if incomes fall or rates rise.

Finance Minister Jim Flaherty made changes to the mortgage insurance rules in July, after growing concerned that house prices and household debt levels were rising too fast. Those changes, which made it somewhat harder to obtain a mortgage, included cutting the maximum length of an insured mortgage to 25 years from 30 years.

“We expect overall housing market activity to remain subdued this year,” says RBC chief economist Craig Wright. “That said, we believe that there is scope for some mild strengthening from recent activity levels, as the negative effects of the mortgage insurance rule changes, implemented in July, 2012, gradually dissipate.”

While affordability is improving, RBC is warning that many families could be priced out of the market if interest rates were to jump.

“Exceptionally low interest rates have been the key factor keeping home affordability from reaching dangerous levels in recent years,” says Mr. Wright. “Residential property values are elevated in Canada and, for many households, ownership remains accessible only because of rock-bottom mortgage rates.”

BMO’s report suggests that, nationwide, Canada’s housing market is overvalued by about 10 per cent.

RBC’s housing affordability measure calculates the proportion of pre-tax household income that is required to service the costs of a house at current market prices. Both detached bungalows and condos saw the measure fall by 0.2 percentage points (to 42.1 per cent and 28 per cent respectively), while the measure for a two-storey home fell by 0.3 percentage points to 47.8 per cent.

All of the measures remain slightly higher than their historical averages, but the national figures are being propped up by “extremely poor affordability conditions” in the Vancouver area, RBC says.

Roughly 82.2 per cent of pre-tax income was required to service the cost of a detached bungalow in Vancouver during the final quarter of 2012, down 2.6 percentage points from the prior quarter, RBC says. Toronto’s measure was 52.8 per cent, down 0.4 percentage points; Montreal was 39.3 per cent, down 0.9 percentage points; Ottawa 38.8 per cent, down 0.5 percentage points; and Edmonton 30.7 per cent, down 0.1 percentage points. In Calgary, where the market is on an upswing, the measure was 38.1 per cent, up 0.2 percentage points.