Housing Situation: The Report

A report focusing on the Canadian real estate market situation of 2008 and the 1st half of 2009 was recently brought by The Canada Mortgage and Housing Corporation. It is focused mainly on the housing starts and the issue of affordability to rent and own.

The report shows that after the shock of last year, now our real estate market is recovering again, however slowly. If we compare the new home sales figures for the first six months of the year , we can see that the 2009 numbers were 43% lower than in 2008. But in July 2009, the MLS sales were already even better than last year - specifically by 17%.

The general movement on the real estate market is growth now, and this goes also for the new housing price index. The average price in Canada has moved from -0.6% to -0.1% between January and May. In keeping with the improving resale market, the new housing price change in Toronto was slightly over zero for most of the time.

Economic conditions: Unemployment

We can be fairly optimistic at the moment in regard to our economy. First, the unemployment growth appears to have got under control. In July, the number of net losses was 13,000, while during the first quarter of 2009, the fall reached 273,000. Moreover, the Bank of Canada reports the positive results of the stimulus packages that were employed by many countries during the last year.

Affordability to rent

When we want to calculate the affordability to rent, we need to find out how many hours in a month people have to work in order to earn the average price of a 2-bedroom apartment rent or the average mortgage payment down to 30% of gross monthly wages. (The hourly wages in Canada in 2008 were growing by over 5 per-cent to $23.69 (Ontario: $24.65, Toronto: $24.93)).

From 114 to 113 hours per month - that is how the average number of hours required to bring the average rent for a 2-bedroom apartment down to 30% has changed. The number of hours for Toronto declined from 149 to 146 and brought this city the second "most expensive" position right after Vancouver, while the biggest decrease was reported in St John's, Brantford or Guelph.

Affordability of home owner-ship

While the general decline in the hours required to rent was rather insignificant, the general decline in the hours required to bring the average mortgage payments down to 30 per-cent of gross income is more noticeable – from 255 hours in 2007 to 240 hours in 2008. In Toronto, the decline of hours required to own was quite noticeable - from 299 to 286. Nevertheless, the costs of owned flats in Toronto are still fourth highest, after Vancouver, Victoria and Abbotsford.

Conclusion

As the whole housing market is cooling from the fall in the second half of 2008, also new housing is becoming a bit more affordable, which is news I really like to bring to my clients, being a real estate agent from Toronto. In the first six months of 2009, the prices were slightly decreasing and the affordability of renting and also home ownership was becoming more favorable. With ongoing low interest rate, this period of time remains ideal time to acquire a property, before the market will take second breath.