The Canada Mortgage and Housing Corporation recently released a report on the Canadian real estate market situation of 2008 and the 1st half of 2009. It deals mainly with the housing starts and with the affordability to rent & buy.
The real estate market in Canada is now slowly recovering from the last year’s shock, as it follows from the report. While new home market actual starts slowed down from January to June 2009 by over 43 per-cent compared to the same period in 2008, the MLS sales increased by over 17 per-cent in confrontation to the July 2008 results.
New housing price index increase seems to follow the overall trend on the real estate market. The average price in Canada has varied from -0.6% to -0.1% between January and May. The new housing price in Toronto has changed only slightly over zero numbers, in accordance with the recovery of the resale market.
Economic conditions: Unemployment
There are some good news regarding the economy. First, the unemployment growth appears to have got under control. In July, the number of net losses was 13,000, while during the first quarter of 2009, the fall reached 273,000. Second, the Bank of Canada has found out that there is finally some positive results of the various stimulus packages employed in many countries.
Affordability to rent
When we want to calculate the affordability to rent, we need to find out how many hours in a month people need to work in order to earn the average price of a 2-bedroom apartment rent or the average mortgage payment down to 30% of gross monthly wages. (The Canadian hourly wages average grew by over 5% and reached $23.69 in 2008 (Ontario: $24.65, Toronto: $24.93)).
Generally, the average number of working hours needed to earn the average rent for a 2-bedroom apartment down to 30% has declined from 114 to 113 hours per month. The number of hours for Toronto declined from 149 to 146 and brought this city the second “most expensive” position right after Vancouver, while the biggest decrease was observed in St John’s, Brantford or Guelph.
Affordability of home owner-ship
While the number of hours necessary to rent didn’t decrease so distinctly, the same number for average mortgage payments down to 30% of gross income was more noticeable – between 2007 and 2008 it declined from 255 to 240 hours. Toronto was one of the places that experienced one of the most significant declines in hours necessary to own: from 299 to 286. But yet Toronto remains 4th among the most expensive places to own after Vancouver, Victoria and Abbotsford.
Conclusion
As a result of the current situation when the housing market is still cooling from the second half of 2008, the new housing is now somewhat more affordable, which is news I really like to bring to my clients, being a real estate agent in Toronto. In the first six months of 2009, the prices were slightly decreasing and the affordability of renting and also home ownership was becoming more favorable. With ongoing low interest rate, this period of time remains a great time to purchase a property, before the market will take second breath.
Tags: buy, Canada, condo, house, housing, property, Real Estate, rent, report