Manitoba's housing affordability stays neutral; market sees surge of homes for sale in Q2 2014: RBC Economics

 Manitoba's housing affordability stays neutral; market sees surge of homes for  sale in Q2 2014: RBC Economics  TORONTO, Aug. 28, 2014 /CNW/ - Housing affordability in Manitoba improved  slightly in the second quarter of 2014 though it continued to play a  predominantly neutral role on homebuyer demand in the province, according to  the latest Housing Trends and Affordability Report issued today by RBC  Economics Research. RBC says that in Q2 the larger narrative was the  strengthening supply of homes for sale in the province.  "Manitoba's housing activity bounced back as expected in the second quarter  from the slowdown caused by frigid temperatures in the first quarter," said  Craig Wright, senior vice-president and chief economist, RBC. "The bigger  story though was a surge of homes for sale. New listings - which have been on  a steady upward trend for some time - rose to levels almost 14 per cent above  where they were a year ago."  The increase in homes available for sale coincided with a wave of completions  of new housing units in the Winnipeg area, which RBC says represents between  85 per cent and 90 per cent of the Manitoba market, and far exceeded a 2.6 per  cent increase in resales.  "This is the latest such divergence that resulted in a notable loosening of  demand-supply conditions since the end of 2012, and more recently, limited  price advances," added Wright.  Despite relatively affordable conditions, levels remain close to historical  norms in the province. RBC housing affordability measures, which capture the  province's proportion of pre-tax household income needed to service the costs  of owning a home at market values, decreased for all three categories in the  second quarter of 2014 (a decline in the measure represents improvement in  affordability).  RBC's affordability measures eased by 0.9 percentage points to 36.3 per cent  for detached bungalows, by 0.5 percentage points to 23.7 per cent for condos  and by 1.5 percentage points to 37.0 per cent for two-storey homes.  RBC's housing affordability measure for the benchmark detached bungalow in  Canada's largest cities in the second quarter of 2014 is as follows: Vancouver  81.8 (down 0.3 percentage points from the previous quarter); Toronto 55.9  (down 0.2 percentage points); Montreal 37.3 (down 1.6 percentage points);  Ottawa 36.0 (down 0.4 percentage points); Calgary 33.6 (down 0.8 percentage  points); Edmonton 31.7 (down 1.1 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.  It is important to note that RBC's measure is designed to gauge ownership  costs associated with buying a home at present market values. It is not a  representation of the actual costs incurred by current owners, the vast  majority of whom have bought in the past at significantly different values  than those prevailing in the latest period.  Highlights from across Canada:  British Columbia: affordability broadly improves            --  Housing affordability in the province improved across the board             in the second quarter, with two-storey homes and condos             reaching their most attractive levels since late 2009. RBC's             affordability measures for B.C. fell between 0.9 and 2.0             percentage points. Still, owning a home at market price in an             area such as Vancouver continued to be very difficult for an             average household to afford.  Alberta: housing affordability remains attractive         --  Escalating prices in the province were largely taken in stride             by Alberta homebuyers in Q2 as lower mortgage rates and solid             growth in household incomes provided offset. Affordability in             the province improved modestly with RBC measures easing between             0.2 and 0.9 percentage points.  Saskatchewan: homebuyers face little undue affordability pressure         --  The provincial housing market rebounded strongly in the second             quarter with home resales jumping to a new record-high. At the             same time, RBC's affordability measures for Saskatchewan fell             between 1.3 and 0.8 percentage points, and stood close to their             historical averages.  Ontario: homebuyers undisturbed by affordability strains         --  Housing affordability changed very little in Ontario in the             second quarter and homebuyers did not appear to be overly             concerned by the fact that affordability remained somewhat             stretched for single-family homes. Lower rates were the main             factor contributing to marginal declines in RBC's measures for             Ontario, which edged lower between 0.1 and 0.2 percentage             points.  Quebec: improved affordability helps halt housing market slide         --  Quebec's housing market activity, which had been falling since             early 2012, stabilized in Q2. Home resales rose modestly and             the supply of homes for sale grew. Second quarter affordability             measures for the province eased for all housing types - between             0.9 and 1.8 percentage points. This improvement in             affordability likely helped stabilize the market at the margin             in the latest quarter.  Atlantic Canada: attractive affordability conditions         --  The region's housing affordability conditions improved quite             noticeably in the second quarter thanks to lower mortgage rates             and subdued price pressures. RBC's measures for Atlantic Canada             dropped between 0.9 and 1.8 percentage points.  The full RBC Housing Trends and Affordability report is available online, as  of 8 a.m. ET today.    SOURCE  RBC  Robert Hogue, Senior Economist, RBC Economics Research, 416-974-6192 Elyse  Lalonde, Communications, RBC Capital Markets, 416-842-5635  To view this news release in HTML formatting, please use the following URL:  CO: RBC ST: Ontario NI: FIN ECO ECOSURV  
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