Time to Buy?

The cost of owning a home in Canada rose for the fourth consecutive quarter despite the slowdown in the resale market, according to a housing report released Monday by RBC Economics Research.


"Higher mortgage rates in tandem with a further appreciation in home prices boosted the monthly costs associated with carrying a mortgage on a typical home," said RBC senior economist Robert Hogue. "This extended the deteriorating trend in affordability since the middle of last year."


But despite the downturn, he said affordability remained "within a safe range."


The RBC Housing Affordability Measure calculates the amount of pre-tax household income needed to service the costs of owning a home.


An affordability reading 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 monthly pre-tax income.


During the second quarter of 2010, the national level rose between 1.1 and 2.1 percentage points across the housing types tracked by RBC.


A two-storey home remained the least affordable and experienced the largest increase, climbing 2.1 percentage points to 48.9 per cent. That was followed by the detached bungalow, which rose by 1.9 percentage points to 42.9 per cent and the townhouse, which climbed 1.1 percentage points to 34.1 per cent.


A condominium was the most affordable, rising 1.1 percentage points to 29.3 per cent.


According to the report, the slide in affordability over the past year has reversed about half of the gains accrued in 2008 and early 2009.


Ontario and B.C. saw the most significant deterioration in affordability in the second quarter, although there was some improvement in specific housing types, such as Alberta condominiums and Saskatchewan townhouses. All other provinces showed modest erosion, with the exception of two-storey homes in Manitoba, where the rise in the RBC measure was quite substantial.


In Quebec, affordability was hampered by a rise in home prices, while Atlantic Canada felt a cooling in the housing market as well, which also affected affordability.


"Current levels of affordability suggest some greater-than-usual stress weighing on Canadian homebuyers, but this does not represent an imminent threat to the market," said Hogue. "While we expect rising interest rates to increase mortgage servicing costs, a levelling off in home prices and increasing household income will partly offset the negative effect."

© Copyright (c) Postmedia News

Read more: http://www.vancouversun.com/business/Home+ownership+costs+continuing+climb+despite+slowing+activity/3585234/story.html#ixzz10koVmWo3
Mike Walton

Mike Walton

CENTURY 21 In Town Realty
Contact Me