Hi ,
Home affordability was declining in Canada early this year, but then the coronavirus hit and changed everything.
Sales plummeted under two months of government lockdowns. Now as buyers and sellers slowly return, activity is picking up, but for how long?
In a study this week, RBC senior economist Robert Hogue said the housing market’s road to recovery will be long and bumpy, but there is room for home affordability to improve.
During the lockdown, prices in most places held up because demand and supply both fell. But in coming months economic hardship and lower immigration will result in fewer buyers and more sellers.
“We believe the scale will tip in favour of buyers in many markets across Canada and (benchmark) prices will fall modestly, possibly as early as this summer,” said Hogue.
That, along with historically low interest rates, will reduce home ownership costs, but whether affordability improves depends on whether households can maintain their income.
RBC’s national aggregate affordability measure calculates the percentage of household income needed to service the cost of owning a home.
Ontario
Sellers are keeping their grip on the Toronto market for now, RBC said. The market remains tight, keeping prices up and pushing the affordability measure up to 69%, a 30-year high. “We expect the recession and lower immigration to loosen demand-supply conditions in the area later this year. This could potentially bring some affordability relief.”
(Source: Financial Post June 26, 2020)
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