Saskatchewan's housing affordability improves amid market rebound from winter's slowdown: RBC Economics

Saskatchewan's housing affordability improves amid market rebound from 
winter's slowdown: RBC Economics 
TORONTO, Aug. 28, 2014 /CNW/ - Saskatchewan's housing affordability improved 
in the second quarter of 2014 amid a rebound in the housing market following 
poor weather that stifled activity this past winter, according to the latest 
Housing Trends and Affordability Report issued today by RBC Economics Research. 
"Saskatchewan's housing market had a convincing snapback in Q2 from the winter 
slowdown with resales jumping to a new record-high of 4,500 units for this 
period of the year," said Craig Wright, senior vice-president and chief 
economist, RBC. "Strong activity more than made up for a sluggish first 
RBC notes that year-to-date statistics suggest that the housing market is on 
pace to match 2012, which logged the strongest annual number of units sold on 
record at 13,900. Much of the gain in the second-quarter took place in 
Saskatoon, a market that RBC says has been flying high since 2011. 
"At this point, homebuyers in the province face little undue affordability 
pressure as measures remain close to long-term averages," added Wright. 
The 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, fell across all housing categories in the second 
quarter (a decrease in the measure represents an improvement in 
affordability). RBC's affordability measures for Saskatchewan declined by 1.3 
percentage points to 38.9 per cent for two-storey homes, by 1.0 percentage 
points to 35.1 per cent for bungalows and by 0.8 percentage points to 24.4 per 
cent for condominiums. 
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.

Manitoba: new home listings surge; affordability plays largely neutral role
        --  The big housing market story in Manitoba was a surge of homes
            being offered for sale with new listings growing to levels
            almost 14 per cent above where they were a year ago. RBC's
            affordability measures fell between 0.5 and 1.5 percentage
            points but remained close to long-run averages, suggesting that
            affordability likely plays a neutral role in home buying
            decisions in the province.

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

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.

Robert Hogue, Senior Economist, RBC Economics Research, 416-974-6192 Elyse 
Lalonde, Communications, RBC Capital Markets, 416-842-5635 
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-0- Aug/28/2014 09:00 GMT
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