Photo: James Bombales
Housing affordability reports for the third quarter of 2018 are coming in, and they’re not looking pretty.
Affordability worsened in nine out of 10 urban markets last quarter, according to the National Bank’s latest housing affordability index. While home price growth has slowed in many cities, average income is struggling to keep pace.
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“Expensive housing markets such as Vancouver and Toronto slowed down markedly in 2018 and home prices even declined in Q3,” reads the report. “Despite lower home prices, homebuyer affordability failed to improve as wages were down in those markets.”
As affordability deteriorates, a trend is making itself known — families unable to afford a low-rise home are increasingly turning to the condo market as a cheaper alternative.
“While a significant portion of home buyers have been priced out of single-family homes, demand is currently strong for condos as shown by prices rising 6.8 percent over the past year [while non-condo prices are flat],” reads the report.
But as demand shifts towards the condo market, its affordability is beginning to deteriorate. The trend is particularly noticeable in Toronto, where condo prices were up 6.1 percent year-over-year last quarter.
“With non-condo ownership being unattainable for most households, a spillover could be headed towards the relatively more affordable condo segment,” reads the report.
Meanwhile, Vancouver’s condo market experienced its 13th consecutive quarterly affordability deterioration in Q3. While the average home price was down 0.9 percent quarter-over-quarter, it rose to a nationwide high of 6.9 percent over the past year.