Canada's Housing Bubble

January 21, 2010 Desjardins

Affordability in Canada continues to deteriorate
Prices continue to rise in the fourth quarter

The Desjardins Affordability Index (DAI) declined once again across the country in the last quarter of 2009. Home sales reached a new peak, pushing the average price to a record $342,231 in the fourth quarter. As a result, the real estate market became less affordable despite the slight drops in mortgage rates at the end of the year. The DAI has moved even further away from its historic average after settling in the affordable zone, albeit briefly, during the recession due to the effect of declining prices. The market recovered very quickly and the expansion phase that began a few months ago should continue in 2010. The pace should be somewhat less sustained, however, given the gradual erosion of affordability...

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