If you want to own a single-family home in Canada — especially in the hip urban centres of Vancouver, Montreal and Toronto — be prepared to plunk down extra cash.
That may not strike you as breaking news – but decreasing affordability is becoming a trend. According to the latest Housing Trends and Affordability Report released this week by RBC economics, the affordability of single-family homes in Canada decreased this past summer — that’s the second consecutive quarterly deterioration.
Bungalows Now Cost Half Of Average Canadian Income
The RBC Housing Affordability Measure describes the proportion of pre-tax household income needed to carry the costs of owning a home at current market values. It uses a detached bungalow as a benchmark for the Canadian housing market.
This latest report shows that the national affordability for an average bungalow rose 0.7 of a percentage point, to 43.3 per cent. What does that mean? The average Canadian household would currently have to devote 43.3 per cent of its pre-tax income to owning an average bungalow.
Two-Storey Home Prices Go Sky High
Other categories of homes saw similar rises; the measure for two-story homes climbed by 0.6 of a percentage point to 48.9 per cent. For condos, the number climbed to 28 per cent.
City Housing Prices Drive Buyers To Condos
The numbers reflect the overall mood of the market; demand for single-family, detached homes is high while quantities are lower, driving up prices and ownership costs. In the aforementioned urban centres, ownership of a single-family, detached home can be a lofty dream; for many, condos are the only affordable option for ownership.
But, the RBC report notes, this isn’t the same country-wide. RBC says that in other Canadian markets, “affordability is generally in line with historical norms for all housing categories.”
High prices in Vancouver and Toronto don’t mean that sales are suffering. Despite an average sale price increase of 7.4 per cent from October of last year, the Toronto Real Estate Board reported 8,000 sales last month. And the Real Estate Board of Greater Vancouver reported that October sales in its areas rose 37.8 per cent compared to 2012.