Alberta's Housing Market Continues to Experience Renaissance in Third Quarter: RBC Economics

Alberta's Housing Market Continues to Experience Renaissance in Third Quarter: 
RBC Economics 
TORONTO, Nov. 22, 2012 /CNW/ - Alberta's housing market enjoyed a strong 
resurgence in activity thanks to an unusual mix of favourable factors in the 
third quarter of this year, according to the latest Housing Trends and 
Affordability Report, issued today by RBC Economics Research. 
RBC indicated that attractive and improving affordability, firm and steady 
resales, balanced demand and supply and moderate price increases in the 
province are a far cry from the prolonged market slump that followed the 
mid-2000s boom. 
"Underpinned by a vibrant provincial economy and strong population growth, we 
expect that Alberta's recent housing renaissance is likely still in its 
initial stages," said Craig Wright, senior vice-president and chief economist, 
RBC. "Strong economic growth is forecast to continue into 2013, which bodes 
well for further advances in the provincial housing market next year." 
RBC's housing affordability measures for Alberta, which capture the province's 
proportion of pre-tax household income needed to service the costs of owning a 
home at going market value, edged lower for all housing categories (a decline 
in the measure represents increased affordability). The measure for the 
benchmark detached bungalow fell by 0.3 percentage points to 32.7 per cent, 
the standard two-storey home by 0.4 percentage points to 35.4 percent and the 
condominium apartment by 0.2 percentage points to 20.1 per cent. 
"Alberta's housing affordability continues to be in a great position. With 
provincial measures standing below both historical averages and national 
averages, it's quite an attractive regional picture," added Wright. 
Calgary-area affordability at multi-year best 
The Calgary-area market bucked the slowing trend in home resales seen in other 
Canadian markets in the third quarter with steady activity relative to the 
previous quarter. It also matched the broad-based improving trend in housing 
RBC measures eased between 0.2 and 0.7 percentage points in the Calgary area 
to multi-year lows; early 2009 was the last time two-storey homes had a 
measure this low and the measure for condominiums is at its lowest level since 
late 2005. 
"A significant pickup in resales during the first half of the year 
considerably tightened Calgary's market conditions, which may eventually lead 
to stronger upward pressure on home prices in the city," stated Wright. 
Where housing affordability stands in Canada 
RBC's housing affordability measure for the benchmark detached bungalow in 
Canada's largest cities is as follows: Vancouver 83.2 per cent (down 5.8 
percentage points from the previous quarter); Toronto 52.4 per cent (down 0.7 
percentage points); Montreal 40.2 per cent (up 0.1 percentage points); Ottawa 
38.7 per cent (down 0.4 percentage points); Calgary 38.3 per cent (down 0.7 
percentage points) and Edmonton 31.1 per cent (down 0.6 percentage points). 
The RBC Housing Affordability Measure, which has been compiled since 1985, is 
based on the costs of owning a detached bungalow (a reasonable property 
benchmark for the housing market in Canada) at market value. Alternative 
housing types are also presented, including a standard two-storey home and a 
standard condominium apartment. The higher the reading, the more difficult it 
is to afford a home at market values. For example, an affordability reading of 
50 per cent means that homeownership costs, including mortgage payments, 
utilities and property taxes, would take up 50 per cent of a typical 
household's monthly pre-tax income. 
Highlights from across Canada: 

    --  British Columbia:
        Affordability hurdles still tough to clear
        British Columbia's housing market experienced improvements in
        the third quarter of 2012, and yet, affordability conditions
        remained the poorest across Canada. RBC measures fell between
        2.0 percentage points and 3.7 percentage points, the largest
        drops across Canada. The situation remains less severe
        elsewhere in the province; the share of income needed to carry
        ownership costs in Victoria, for instance, is almost half the
        share in Vancouver for some housing types.
    --  Saskatchewan:
        Little evidence of affordability strain
        Significant deteriorations in housing affordability in the
        second quarter in Saskatchewan were largely reversed in the
        third with RBC measures in the province falling between 0.9
        percentage points and 1.3 percentage points. The measures stood
        just slightly above their long term averages for all housing
        categories, indicating little in the way of undue affordability
        induced strain on the market.
    --  Manitoba
        - Market losing some of its steam; minimal pressure on
        Declining housing prices spurred a notable improvement in
        housing affordability in Manitoba over the third quarter. RBC
        measures fell between 0.6 percentage points and 1.6 percentage
        points, which fully unwound the deterioration that occurred in
        the prior quarter. Provincial affordability levels sit slightly
        higher than their averages since the mid 1980s, but remain well
        below the corresponding national averages.
    --  Ontario:
        More balanced conditions help to ease affordability stress
        Ontario's housing affordability eased somewhat in the third
        quarter, but remains under mild pressure, most notably in the
        two-storey home segment. RBC measures declined between 0.5
        percentage points and 1.1 percentage points in the province,
        which, in effect, rolled back the two consecutive quarterly
        increases that took place in the first half of this year.
    --  Quebec:
        Second straight affordability improvement
        Housing affordability improved for the second straight quarter
        in Quebec, with RBC's measures edging lower across all housing
        types in the province, between 0.6 percentage points and 0.8
        percentage points, in the third quarter. For the most part,
        levels are only slightly worse than the average historical
        level, indicating that prospective homebuyers in Quebec may
        feel minimally stretched budget-wise, if they bought a home at
        current market prices.
    --  Atlantic:
        Affordability position remaining quite stable
        Housing affordability in Atlantic Canada improved slightly
        across the board, with RBC measures in the region inching lower
        by 0.2 percentage points to 0.7 percentage points relative to
        the previous quarter. Affordability measures have been
        reasonably stable over the past three years in the region,
        showing no discernable trends on either the up or down sides.

The full RBC Housing Trends and Affordability report is available online, as 
of 7 a.m. ET today, at

Please contact: Robert Hogue, Senior Economist, RBC Economics Research, 
416-974-6192 Elyse Lalonde, Manager, Corporate Communications, RBC Capital 
Markets, 416-842-5635


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