{"id":19141,"date":"2022-01-04T11:11:00","date_gmt":"2022-01-04T19:11:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=19141"},"modified":"2021-12-31T10:50:04","modified_gmt":"2021-12-31T18:50:04","slug":"housing-affordability-will-continue-to-decline-because-of-already-challenging-conditions-rising-interest-rates-ownership-costs","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2022\/01\/housing-affordability-will-continue-to-decline-because-of-already-challenging-conditions-rising-interest-rates-ownership-costs\/","title":{"rendered":"Housing Affordability will Continue to Decline Because of Already Challenging Conditions, Rising Interest Rates &#038; Ownership Costs"},"content":{"rendered":"<p style=\"text-align: justify;\">Amid surging prices and tight supply, Canada\u2019s housing affordability has dropped to its worst level in 31 years, according to a report released today by RBC.<\/p>\n<p style=\"text-align: justify;\">RBC\u2019s housing affordability measure is the percentage of median pre-tax household income required to cover ownership costs, including mortgage payments, property taxes and utilities.<\/p>\n<p style=\"text-align: justify;\">The national average jumped two percentage points during the third quarter to 47.5%. The latest numbers follow a 2.7% surge in the second quarter, significantly reducing affordability after home prices dropped in 2020.<\/p>\n<p style=\"text-align: justify;\">\u201cHomebuyer demand is supercharged and inventories are near historical lows in virtually every market, creating intense competition between buyers and pressured prices up,\u201d said senior RBC economist Robert Hogue. \u201cThese conditions have widely eroded housing affordability in the past year.\u201d<\/p>\n<p style=\"text-align: justify;\">Home prices keep ramping up toward the end of 2021. According to a report released last week by RBC, the MLS Home Price Index for Canada increased for a third consecutive month in November, rising 2.7% month-over-month and representing a 25.3% increase from a year ago.<\/p>\n<p style=\"text-align: justify;\">Greater Vancouver continues to be the country\u2019s least affordable market, with the average household needing to allocate 64.3% of its income to cover ownership costs. Toronto trails just behind, with an RBC affordability measure of 61.9%.<\/p>\n<p style=\"text-align: justify;\">Montreal reached its worst level in 13 years with a measure of 40.7%, while Ottawa hit 40% to record its highest mark in a quarter-century. Deteriorating affordability impacted housing from coast to coast, with St. John\u2019s the only market to see figures improve during the third quarter.<\/p>\n<p style=\"text-align: justify;\">\u201cThe weight of ownership costs got heavier in all other markets we track for both single-family homes and condo apartments,\u201d Hogue said.<\/p>\n<p style=\"text-align: justify;\">Rising prices have forced some Ontario buyers to relocate to more affordable regions in Atlantic Canada, where RBC\u2019s affordability measure has remained below long-term averages. The same conditions have been seen in Alberta, where high sales activity has led to moderate price increases, although not enough to significantly impact affordability.<\/p>\n<p style=\"text-align: justify;\">RBC forecasts that affordability will continue to decline during the next year, with the Bank of Canada expected to increase its overnight rate next spring.<\/p>\n<p style=\"text-align: justify;\">\u201cEarlier in the pandemic, home buyers benefited from declining interest rates that offset the impact of escalating property values,\u201d said Hogue, noting that\u2019s no longer the case, and recent rate hikes have impacted affordability. \u201cA small increase in the five-year fixed mortgage rate accounted for half the two percentage-point increase in RBC\u2019s aggregate measure for Canada in the third quarter.\u201d<\/p>\n<p style=\"text-align: justify;\">According to the RBC report, rising interest rates alone could increase the national affordability measure between two to 3.5 percentage points in 2022, while an additional five per cent spike in home prices would translate to an extra two percentage points.<\/p>\n<p style=\"text-align: justify;\">\u201cBecause of already challenging conditions and the fact that rising interest rates will push up ownership costs more in Canada\u2019s priciest markets, we expect buyers in Vancouver, Toronto, Victoria and, to a lesser extent, Ottawa and Montreal to be under the most pressure to reset their expectations,\u201d said Hogue.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.livabl.com\/2021\/12\/canadian-housing-affordability-plummets-worst-level-31-years-rbc.html\" target=\"_blank\" rel=\"noopener\">RBC : Canadian Housing Affordability Plummets to Worst Level in 31 Years<\/a> by Ryan Garner | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Amid surging prices and tight supply, Canada\u2019s housing affordability has dropped to its worst level in 31 years, according to a report released today by RBC. RBC\u2019s housing affordability measure &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2022\/01\/housing-affordability-will-continue-to-decline-because-of-already-challenging-conditions-rising-interest-rates-ownership-costs\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-19141","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Housing Affordability will Continue to Decline Because of Already Challenging Conditions, Rising Interest Rates &amp; Ownership Costs &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2022\/01\/housing-affordability-will-continue-to-decline-because-of-already-challenging-conditions-rising-interest-rates-ownership-costs\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Housing Affordability will Continue to Decline Because of Already Challenging Conditions, Rising Interest Rates &amp; Ownership Costs &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Amid surging prices and tight supply, Canada\u2019s housing affordability has dropped to its worst level in 31 years, according to a report released today by RBC. 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