Aug 27, 2009
Housing Situation Report in Canada: Syntesys
The conditions on the Canadian real estate market in 2008 and the first half of 2009 are analyzed in a report recently published by the Canada Mortgage and Housing Corporation. It deals mostly with the housing starts and with the affordability to rent & buy.
The report finds that after the shock of last year, now our real estate market is recovering again, however slowly. The new home market began the year of 2009 some 43% lower than in the first six months of 2008. However, in July 2009, the MLS sales already grew bigger by over 17% than in July 2008.
The general trend on the real estate market is growth now, and this goes also for the new housing price index. The average price in Canada has changed from -0.6% to -0.1% between January and May. In conformity with the improving resale market, the new housing price change in Toronto was slightly over zero for most of the time.
Economic conditions: Unemployment
We can be rather optimistic at the moment in regard to our economy. First, the unemployment growth seems to have got under control. In July, the number of net losses was 13,000, whereas during the first quarter of 2009, the fall reached 273,000. Moreover, the Bank of Canada describes the positive outcomes of the stimulus packages that were brought out by many countries during the last year.
Affordability to rent
Affordability of home ownership or renting is based on calculations of how many hours one needs to work in a month to bring the average cost of 2-bedroom apartment rent or the average mortgage payment down to 30 per-cent of gross monthly income. In 2008, the average hourly wages has increased by more than 5% up to $23.69 (Ontario: $24.65, Toronto: $24.93)).
Generally, the average number of working hours required to earn the average rent for a 2-bedroom apartment down to 30% has declined from 114 to 113 hours per month. The biggest decrease has been observed in St John's, Brantford and Guelph, whereas in Toronto the number of hours declined from 149 to 146, meaning that Toronto ended up as the second most expensive city in this "competition", just after Vancouver.
Affordability of home owner-ship
While the number of hours required to rent didn't decrease so distinctly, the same number for average mortgage payments down to 30% of gross income was more distinct - between 2007 and 2008 it declined from 255 to 240 hours. One of the cities where the amount of hours required to own declined the most, was Toronto: from 299 to 286. But yet Toronto stays 4th among the most expensive cities to own after Vancouver, Victoria and Abbotsford.
As an overall result of real estate market recovering from the second half of the year 2008, also new housing made a step towards better affordability, which I really welcome, being a Toronto realtor. If we look at the numbers for the first half of 2009, we can see steady or slight decrease of prices and slight improvement in affordability of both renting and home ownership. As the interest rates are still staying quite low, it is now a good time for purchasing a property, before the market takes a second breath.
Photo source: Rantes Aguirre