“RBC said the proportion of gross income needed to pay for home ownership — including mortgage payments, property taxes and utilities, fell 0.8 percentage points to 39.9% in last year’s fourth quarter for a detached bungalow. For a standard two-storey, the toll declined 0.4 points to 46%, and for condominiums, it was down 0.4 points to 27.6%.”
Housing affordability improves in Q3 of 2010, will it continue?
During the final months of 2010, Canadians got a much needed break. Housing affordability actually eased. But, before you start jumping for joy, apparently it won’t last for long.
After the craziness of 2009 and the early months of 2010, a slowdown in the housing market was expected. And, to match these expectations, affordability improved in the final quarter of 2010.
According to the Financial Post:
But keep in mind, we still have record-low interest rates. And, should the Bank of Canada choose to restart their rate hike campaign, affordability will fall once again.
Damn– just when you thought there was some good news, eh? But wait, there’s even more.
Canada’s economy is on its way to recovery– that’s why the Bank of Canada is even toying with the idea of raising rates. So as income and job growth continue to improve, the housing market will improve (or at least be unharmed) by less affordability.
So it’s sort of damned if you do, damned if you don’t. Except replace damned with “fine” and replace you with Canada’s economy. On the one hand, if the economy continues to recover, then the Central Bank will raise rates and homes will become less affordable (but more people will have more money to buy ’em). On the other hand, if the economy doesn’t continue to improve the Central Bank won’t raise rates and affordability won’t be affected.
Sounds good– thanks RBC.