- Housing affordability erodes
- A Nancy Pelosi scene I’d love to see
- Markets at a glance
- From today’s Globe and Mail
Housing affordability in Canada is strained and getting worse.
In its latest look, National Bank Financial found that affordability deteriorated in the fourth quarter for the 14th three-month period in a row.
As The Globe and Mail’s Janet McFarland reports, major Canadian banks have just trimmed the posted rate for five-year, fixed-term mortgages, by 15 basis points, easing some of the issue on that front.
We’ll see how the first quarter plays out after those cuts. But as 2018 was winding down, higher borrowing costs were eating into affordability, notably in inflated markets such as Victoria, Toronto and Vancouver.
“All but two markets experienced a deterioration stemming from a 20-basis-point increase for residential mortgage rates, hitting harder the priciest markets in the country,” said National Bank deputy chief economist Matthieu Arseneau and economist Kyle Dahms.
“Financing costs were up for a sixth consecutive quarter, which marked the longest streak of rises since the period of [1999-2000],” they added.
The two markets where affordability actually eased were the oil-hit Alberta centres of Calgary and Edmonton.
Indeed, according to Mr. Arseneau and Mr. Dahms, housing affordability is now so nasty that:
1: Mortgage payments on a representative home, expressed as a percentage of income, climbed 1.4 percentage points in the quarter.
2: Home prices rose 0.9 per cent from the third quarter on a seasonally adjusted basis.
3: The benchmark five-year mortgage rate increased 20 basis points, while median household income also gained 0.2 per cent.
4: An eye-popper, this: In Vancouver, the measure for homes not including condos “crossed the psychological threshold of 100 per cent, as it would now require 101.5 per cent of pretax median household income to pay for a representative home.”
5: It now takes 340 months to save for a down payment in Vancouver, for a representative home based on a savings rate of 10 per cent, 102 months in Toronto and 34 months in Montreal. The time it takes to save eased in Calgary and Edmonton.
6: Based on average rent and monthly mortgage payments, it’s cheaper to rent a two-bedroom condo than it is to buy.
7: Home prices do not actually appear “extreme” in Canada compared with centres such as Hong Kong, London, New York, Paris, Beijing, San Francisco and Tokyo, based on costs as of last summer.
8: Canadian home prices, having jumped sharply before B.C., Ontario and the federal bank regulator move to hose markets down, are now rising at a far slower pace than in about 20 other countries.
Here’s a look at some key fourth-quarter statistics for homes not including condos, from the study by Mr. Arseneau and Mr. Dahms:
- Janet McFarland: RBC cuts five-year fixed mortgage rate, other banks expected to follow
- Ian McGugan, Janet McFarland, Paul Waldie, David Ebner: Global real estate hot spots hit hard by market shift
- Delinquencies on Canadian lines of credit tell an intriguing tale
- Gary Mason: The great global housing slump is on
- Canada’s housing market correction ‘is not over yet’
- Housing affordability at its worst since 1990 (and only the rich can buy in Toronto and Vancouver)
- Rob Carrick: The case for 30-year mortgages as a financial stress reliever for new buyers
- How vulnerable is your housing market? Check out this cool-to-hot heat map of 15 Canadian cities
- Gary Mason: Vancouver’s housing crisis will forever haunt Gregor Robertson’s time as mayor
A Nancy Pelosi scene I’d love to see
I find the whole Venezuela thing really interesting. I’m declaring myself interim president
- Trump says he’ll delay State of the Union speech until after shutdown is over
- Venezuelan opposition leader declares himself interim president as Maduro cuts ties with U.S.
Markets at a glance
From today’s Globe and Mail
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- Tim Kiladze, Christina Pellegrini: Green Growth’s Aphria play: Why the hostile takeover bid is so unusual – and so bold
- Rita Trichur: No bargains allowed: Why is the Competition Bureau going after WestJet for cutting prices?