Our Canadian neighbors have a positive outlook on their housing market, according to a the RBC Housing Affordability publication. Despite price increases and a rise in mortgage rates, Canadians have been able and are continuing to try to avoid a "housing bubble" that would cause homes to be unaffordable.
The Canada Mortgage and Housing Corporation (CMHC) even noted an increase in housing starts from 185,400 in January to 196,700 in February. “The gain in February housing starts was concentrated in the multiple starts segment, particularly in Toronto,” stated Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre.
The report suggests the noted increases are mild however. Fourth quarter 2009 housing prices and rate increases did not significantly affect the market. The national level increases in the affordability measures were only between 0.1 and 0.3 percent, all depending on the housing type.
"The anticipated and gradual rise in interest rates indicates that affordability is likely to gradually get worse as rates return to normal levels," stated Robert Hogue, senior economist, RBC.. "The significant drop in mortgage rates since late 2008 was the principal factor contributing to the overall improvement in housing affordability in the past year."
The RBC Economics Research’s housing affordability measures are based on "median pre-tax household income required to service the cost of mortgage payments." Also included in the results are property taxes and utilities on a detached bungalow, which is usually a small, 1-story house or cottage.
The higher the housing affordability measures, the more the cost. The report suggests that no more than 32 percent of a borrower's gross income should be devoted to housing costs, including mortgage payments and related housing bills.
Source: RBC Housing Trends and Affordability March 2010
Written by Amy Munday
Huliq.com
Comment and add to the story without registration, but keep the comments meaningful please. Links are not accepted.
