Canada's Housing Bubble

Affordability improvement running out of steam?

Housing affordability improved in Canada for the fifth consecutive quarter during the second quarter. RBC’s affordability measures at the national level fell modestly for all housing types — down 0.4 percentage points to 26.9% for standard condominiums and 0.6 percentage points for each of detached bungalows (39.1%), standard two-storey homes (44.4%) and standard townhouses (31.5%). (The lower the measure, the more affordable is homeownership.) This follows the biggest quarterly declines on record in the first quarter when a steep drop in mortgage rates and softening housing prices significantly lowered the cost of homeownership. The latest improvement in affordability was widespread across the country and housing types. The only exception among major cities was the standard condominium segment in Vancouver, where RBC’s measure rose marginally for the first time since early 2008. Ottawa posted some of the largest declines, likely playing catch-up with other cities since it joined the improving trend later than in most areas in Canada.
At the national level, affordability has now been restored to pre-housing boom levels (that is, those prevailing in late 2005-early 2006)...

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