Calgary and Edmonton are the major Canadian cities where housing affordability is the most attractive, says a new real estate report released Friday.
But the RBC Housing Affordability report says signs are accumulating that the Calgary housing market is finally overcoming its protracted slump and entering a more vigorous phase.
“Home resales grew for the second consecutive time in the first quarter of this year, advancing the most since the middle of 2009,” says the report. “This helped remove even more of the earlier market slack and set a healthier balance between demand and supply.
“Home prices have yet to break out of their listless trends but they did rise at their fastest rate in more than a year, with detached bungalows leading the way. The firming of market conditions and higher prices had only limited impact on Calgary’s affordability, which remains among the most attractive of Canada’s major cities.”
The RBC Housing Affordability Measures show the proportion of median pre-tax household income required to service the cost of mortgage payments (principal and interest), property taxes and utilities. The higher the measure, the more difficult it is to afford a house. For example, an affordability measure of 50 per cent means that home ownership costs take up 50 per cent of a typical household’s pre-tax income.
For Calgary, in the first quarter of this year, the average price for a detached bungalow was $413,400, down 1.4 per cent from a year ago. The affordability measure was 35.9 per cent, up 0.9 per cent from the previous quarter but down 3.6 per cent from a year ago. The average since 1985 is 40.3 per cent.
A standard two-storey home had an average price of $410,900, which is a 4.9 per cent decrease from a year ago. The affordability measure was 36.8 per cent, down 0.2 per cent from the previous quarter and by 4.8 per cent from last year. The average since 1985 is 40.9 per cent.
And a standard condominium average price in the first quarter was $250,200, which is down 5.1 per cent from last year. The affordability measure was 22.2 per cent, a 0.2 decrease from the previous quarter and down 2.9 per cent from a year ago. The average since 1985 is 23.4 per cent.
RBC says Alberta’s housing market continues to be stuck in low gear as sales of existing homes and construction of new housing units are showing very modest increases at best so far this year.
“Persistent hesitation on the part of homebuyers is likely symptomatic of long-lasting payback from their overextension during the 2006-2007 boom when home prices jumped by more than 50 per cent,” says the report. “This has since driven up the rate of mortgages in arrears to a generational high in the province. Until the latter stages of 2010, plentiful supply of homes for sale combined with sluggish demand to keep home prices firmly under wraps.
“Stable or slightly declining prices, in turn, contributed to substantial improvement in affordability in Alberta last year. While market conditions have become more balanced in recent months, there remains very little pricing momentum in the provincial market at this stage, maintaining attractive affordability levels — the RBC Measures for all housing categories in Alberta stood below their long-term average in the first quarter.”
In the province, the average price for a detached bungalow in the first quarter was $339,500, up 0.3 per cent from last year. The affordability measure of 31.3 per cent was up 0.4 per cent from the previous quarter but down 2.6 per cent from a year ago. The average since 1985 is 36.4 per cent.
A standard two-storey home in the province had an average price of $363,000, down 3.0 per cent from last year. The affordability measure was 34.2 per cent, a 0.2 per cent decrease from the previous quarter and a 3.7 per cent decline from a year ago. The average since 1985 is 39.0 per cent.
And the average price in Alberta for a standard condominium was $216,000, a decrease of 3.0 per cent from a year ago. The affordability measure of 20.2 per cent was the same as the previous quarter but a 2.3 per cent year-over-year decline. The average since 1985 is 22.4 per cent.