IN THE NEWS –
Home Ownership Harder Across the Country?
The rising trend of home ownership throughout the later part of 2010 came to an end during the first quarter of this year, according to RBC’s Housing Trends and Affordability Research Report released today. The majority of Canadian markets experienced weakened affordability in the first quarter of 2011, with the most noticeable cause being housing affordability (with Vancouver being a key component). "Despite the latest erosion in affordability, provincial levels generally continue to stand near their long-term averages, suggesting that owning a home remains affordable or, at worst, slightly unaffordable across Canada - with Vancouver being a notable exception," said Hogue.
RBC's housing affordability measure for a detached bungalow in Canada's largest cities is as follows: Vancouver 72.1% (up 3.4 percentage points from the last quarter), Toronto 47.5% (up 0.8%), Montreal 43.1% (up 2%), Ottawa 39% (up 0.4%), Calgary 35.9% (up 0.9%) and Edmonton 31.5% (up 0.5 %)
Housing Trends throughout the Country
RBC Economic Research Report: Housing Trends and Affordability report, First Quarter of 2011
Ontario Remains Steady
"Ontario's housing market has reached a cruising speed since the end of 2010 and seems to be on a sustainable path so far this year. The demand-supply equation has remained balanced for the most part, but has firmed just enough to give the sellers a slightly stronger hand," said Robert Hogue, senior economist, RBC. "The provincial market will likely face some headwinds in the coming months, however, as stricter mortgage lending rules and an expected rise in interest rates weigh on home buyer demand."
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Ontario’s housing affordability steady
British Columbia the Least Affordable
“Demand for housing in British Columbia continued on the road to recovery in early 2011 at a pace that slightly exceeded the growth in the number of properties put on the market," said Robert Hogue, senior economist, RBC. "As a result, the slight tightening of supply of homes for sale boosted the pricing power of sellers and negatively impacted affordability."
Brisk activity in the Vancouver area lifted British Columbia's home prices in the first quarter for all three housing categories, with detached bungalows increasing by 3 %, standard condominiums by 4.6 % and standard two-story homes by 5.5 %. Home price increases outpaced household income gains and caused first quarter affordability measures for B.C., which capture the proportion of pre-tax household income needed to service the costs of owning a home, to move higher across all housing types (an increase represents a deterioration in affordability).
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Alberta remains stable and attractive
"The Alberta market continued to be stuck in low gear in the first quarter of 2011. Sales of existing homes and construction of new housing units showed very modest increases," said Robert Hogue, senior economist, RBC. "While market conditions have become more balanced in recent months, owning a home doesn't seem to be getting more expensive in the provincial market at this stage. Affordability levels are still looking quite attractive."
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Saskatchewan Shows Improvement
"The Saskatchewan housing market cooled a little in the early months of this year, following solid performance in the second half of last year," said Robert Hogue, senior economist, RBC. Housing affordability in Saskatchewan showed some improvement in the first quarter of 2011, according to the latest Housing Trends and Affordability report released today by RBC Economics.
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Manitoba Remains Steady
Manitoba's housing market continued to remain steady throughout the beginning of 2011. Housing affordability remains attractive in the province, with little change registered in the first quarter. "Mounting homebuyer demand continued to be met with an equal-sized increase in homes being put out for sale," said Robert Hogue, senior economist, RBC. "This sense of balance across Manitoba kept property value appreciation under control."
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Atlantic Canada Affordable
"The rise in property values in Atlantic Canada in the first quarter contributed to eroding this region's long-standing affordability advantage relative to most other Canadian markets," added Hogue. "Even still, the region's affordability levels remain among the most attractive in the country." Increased demand for homes helped to restore some pricing power to sellers in Atlantic Canada and led to home prices rising between 2.0 % and 3.8 %, depending on the housing type. Brisk home resale activity was led by sizeable gains in St. John's, which further reversed some of the notable declines that occurred in the middle of 2010. "A continued rebound in housing market activity in the region has heated up property values a few degrees in the early part of 2011," said Robert Hogue, senior economist, RBC.
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Market Updates:
TSX -11.45 to 13,607.25 (Reuters)
o As commodity prices gave up ground and economic data reminded investors of the fragility of the U.S. recovery.
• DOW +41.28 to 12,595.81
o Positive employment data helped send New York markets higher as the Labour Department reported the number of people applying for unemployment benefits fell sharply for the second straight week, down 29,000 to a seasonally adjusted 409,000
• Dollar +.27c to 103.30c USD
• Oil -$1.34 to $98.76USD per barrel
o The latest inventory data from the U.S. showing signs of higher demand, was followed by data showing that a widely-watched gauge of future economic performance disappointed.
• Gold -$3.40 to $1492.40 per ounce
• Canadian 5 yr bond yields markets -.01bps to 2.53. The spread (based on the MERIX 5 yr rate published rate of 4.19%) is above the comfort zone at 1.66.
