Patti Croft is recently retired as chief economist, RBC Global Asset Management, with 30 years of experience on Bay Street working as an economist and global asset allocation strategist
I can never figure out the Vancouver housing market. On a national basis, September home sales gained 3 per cent, the second monthly gain in a row, while prices were down slightly as compared to year-ago levels.
However, sales are still down 20 per cent year-over-year, with sales in B.C. off by 36 per cent. But in September, the average MLS price for a single family home in the Greater Vancouver area stood at $679,381 - that is more than two times the national average of $331,089.
Yes I know that it is a beautiful city (when the sun shines) and a desirable locale for foreign investors - it is cheap compared to London and New York, don't you know.
But one of the key metrics I use to gauge whether a bubble is in the making is affordability. RBC's Housing Affordability Measure calculates the share of pre-tax income it takes to service a mortgage, including principal and interest, taxes and utilities.
The latest data show that affordability has deteriorated once again in Vancouver - homeownership costs account for almost 83 per cent of household income for a two storey home. How does anyone afford to buy a house in this city? Qualifying income is more than $155,000.
There is a fabulous website called crackshackormansion, created earlier this year when sales had reached a frenzied pace; you won't believe how little $1-million will buy.
While talk of a bubble may have been timelier earlier this year, I still say the metropolitan housing market most at risk is Vancouver.Report Typo/Error