Alberta only province to see improved housing affordability in Q1 2010

According to this article, Alberta is still an affordable place to purchase real estate. Enjoy the read.

CALGARY - Alberta was the only province to experience an improvement in housing affordability in the first quarter of 2010, according to the latest housing report released today by RBC Economics Research.

The RBC Housing Affordability measures for Alberta eased between 0.1 and 0.6 of a percentage point, further extending the significant drop in the measures since the end of 2007, a trend that was only briefly halted last summer — a drop in the measure means homes are more affordable, said the report.

“In contrast to most other provinces, house prices remained relatively tame in Alberta during the past year or so and this has kept the cost of home ownership in check,” said Robert Hogue, senior economist, RBC. “In the first quarter, all RBC measures were at or below their long-term average, suggesting that affordability remains at favourable levels.”

The RBC Housing Affordability measures for Alberta, which capture the province’s proportion of pre-tax household income needed to service the costs of owning a home, declined across all housing types in the first quarter of the year.

The measure for the benchmark detached bungalow moved down to 33.0 per cent (a drop of 0.4 of a percentage point over the previous quarter), the standard townhouse to 25.4 per cent (down 0.1 of a percentage point), the standard condominium to 21.9 per cent (down 0.4 of a percentage point) and the standard two-storey home to 36.9 per cent (down 0.6 of a percentage point).

But the report found that home prices in Calgary have maintained an upward trend, although the overall pace has fallen short of the national average. In the first quarter, the increase in the costs of home ownership in Calgary was roughly equal to or slightly smaller than household income growth, leaving the RBC affordability measures hovering around the zero mark. Two-storey homes were down 0.5 percentage points, while a standard townhouse was up 0.2 percentage points.

“The housing market rebound turned out to be much more restrained in Calgary, compared to most of the other major markets in Canada,” said Hogue. “After posting strong gains in the early stages of the rebound, resale activity has slowed considerably since the fall, which likely reflects challenges in the city’s job market.”

RBC’s Housing Affordability measure for a detached bungalow in Canada’s largest cities is as follows: Vancouver 73.4 per cent (up 4.8 percentage points over the last quarter), Toronto 49.1 per cent (up 0.4 of a percentage point), Ottawa 40.3 per cent (up 0.3 of a percentage point), Montreal 39.7 per cent (up 0.9 of a percentage point), Calgary 36.5 per cent (down 0.3 of a percentage point) and Edmonton 32.0 (down 0.5 of a percentage point).

The RBC Housing Affordability measure has been compiled since 1985. The higher the reading, the more costly it is to afford a home. For example, 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.

Calgary Herald May 25th, 2010.