Housing affordability in Alberta’s cities is better than it has been since the 1980’s in most areas. In measuring housing affordability there are 3 major components: Incomes, Housing Prices, and Mortgage Interest Rates. So let’s briefly look at those 3 key factors. Alberta incomes, though down, are still leading the nation. Housing Prices are down marginally, and mortgage interest rates are as low as they have ever been. And that make this an excellent time for buyers.
The Canadian Centre for Economic Analysis (CCEA) published a report on Shelter Affordability Across Canada’s Provinces which measures the proportion of income that households devote to their shelter-related needs (including transportation, utilities, and maintenance).
A sub-set of that report, CCEA’s bulletin of April 29, 2016 shows that Alberta and Newfoundland are the only provinces in Canada that feature a Shelter Consumption Affordability Ratio (SCAR ratio) of 35% or less, implying that shelter affordability is relatively less of a problem on average in these provinces than in the rest of Canada.
On the same subject, RBC Economics Research publishes a quarterly report looking at home ownership affordability in Canada entitled Housing Trends and Affordability. The report attempts to balance out differences in incomes and in housing process by province and by city in order to show the ‘relative’ affordability from region to region.
Unfortunately the report does not also take into account different taxation levels, which would make the report much more accurate. Having said that, it is an excellent review of housing costs around the country, and shows us that sometimes the lowest price is not actually the lowest cost for families when the regional variance in incomes is accounted for.
In descending order, here are Q1 2016 ratios for the 6 major cities, showing the percentage of average pre-tax income required for housing costs (mortgage payments, utilities and property taxes):
- Vancouver 87.6% aggregate. Single family homes 119.5%.
- Toronto 60.6% aggregate. Single family homes 71.7%.
- Montreal 42.9% aggregate. Single family homes 42.4% (as SF homes in Montreal are less expensive than multi-family).
- Calgary 35.1% aggregate. Single family homes 37.9%.
- Ottawa 33.0% aggregate. Single family homes 36.8%.
- Edmonton 31.2% aggregate. Single family homes 33.5%.