Homebuyer demand in Calgary has been “supercharged” by a booming economy, says the latest Housing Trends and Affordability Report released Wednesday by RBC Economics Research.
The report said modest deterioration in housing affordability in the Calgary area in the third quarter “is likely to be taken in stride by local homebuyers, because they still benefit from some of the lower ownership costs as a share of household income in Canada.”
The report said RBC’s affordability measures increased for all housing categories — between 0.2 percentage points and 0.7 percentage points. But it said the levels continue to be below the national and historical averages.
“Favourable affordability conditions primarily reflect high household income in Calgary rather than low home prices given that home prices in the area are among the more expensive in the country,” said the report. “While affordability is constructive for homebuyer demand, the more powerful factors driving it, no doubt, are Calgary’s hot labour market and fast-rising population, both supercharged by a booming provincial economy.
“Home resales surged to their highest level in six years in the area. The fact that this occurred despite the worst floods in memory at the end of June is quite telling of the market’s strength at this stage.”
The report said affordability levels in Alberta remained relatively attractive in the third quarter, with measures standing below their historical averages and the national averages.
“Alberta’s strong provincial economy and rapidly rising population continue to fuel housing market activity – third quarter home resales increased by 7.8 per cent from the second quarter, the fastest pace in nearly three years,” said Craig Wright, senior vice-president and chief economist of RBC, in a statement. “The province’s unrelenting economic boom bodes well for continued solid housing market conditions next year.”
RBC’s housing affordability measures capture the proportion of pre-tax household income needed to service the costs of owning a home at market values.
In Alberta, RBC’s measure for bungalows rose by 0.6 percentage points to 32.5 per cent, and the measure for two-storey homes rose 0.2 percentage points to 34.6 per cent. The measure for condominiums increased slightly by 0.1 percentage points to 19.6 per cent.
In Calgary, the measure rose by 0.7 percentage points to 33.7 per cent points for bungalows, 0.4 percentage points to 34 per cent for two-storey homes, and 0.2 percentage points to 19.6 per cent for condominiums.
In Canada, RBC’s measure for detached bungalows rose 0.7 percentage points to 43.3 per cent, while the measure for two-storey homes climbed 0.6 percentage points to 48.9 per cent. The measure for standard condominiums edged only slightly higher by 0.1 percentage points to 28.0 per cent.