Trend towards improved housing affordability reverses in Q3-2009: RBC

From RBC’s November 2009 Housing Trends and Affordability Study

The string of significant improvements in housing affordability in Canada finally came to an end in the third quarter. RBC’s affordability measures rose at the national level for the first time in six quarters for all housing types.

All provinces and major metro markets shared in the deterioration in affordability in the third quarter. British Columbia, especially Vancouver, posted the biggest increases by far in the RBC measures. Toronto and Calgary also recorded notable increases for some housing types, while the rise in the cost of home ownership in the rest of the country has generally been modest.

After steadily improving for more than a year, housing affordability in Saskatchewan deteriorated modestly in the third quarter, with RBC’s affordability measures climbing between 0.5 and 1.0-percentage points. This reflected higher mortgage payments that have resulted from the small increase in mortgage rates as well as stronger property values in many areas of the province. While the cost of home ownership declined substantially in the past year, it remains historically high in the province, as it has only partly reversed the unprecedented increase registered during the boom from late-2006 to early-2008. However, levels that prevailed prior to the boom might have been depressed by previously unfavourable migration flows, which have since reversed. Overall, resale activity in Saskatchewan continues to carry tremendous momentum, being especially vigorous in the past few months with levels close to the records set in late-2007 and early-2008.

Read the full RBC report here.

Thanks to Jen for the heads up on the release of this report.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Real estate geeks can follow our daily updates on Twitter @norm_fisher.

Our Saskatoon home search tool offers MLS listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Norm Fisher
Royal LePage Saskatoon Real Estate

Saskatchewan shows considerable housing affordability improvement: RBC

RBC Economics just released their fall Housing Trends and Affordability study that shows house prices having returned to “pre-boom” levels nationally with Saskatchewan showing considerable affordability improvements, but remaining above long-term historical averages. At the same time, the graph on page eight of the report suggests that affordability improvements may level off as Saskatoon seems to be trending back towards “seller’s market” territory.

Housing affordability improved in Canada for the fifth consecutive quarter during the second quarter…At the national level, affordability has now been restored to pre-housing boom levels (that is, those prevailing in late 2005-early 2006)… However, this restorative phase of the affordability cycle is likely running out of steam. The two major contributors to the significant improvement during the past year or so — the decline in mortgage rates and the drift down in prices — appear to have reached turning points.

Homeownership continued to become more accessible in Saskatchewan in the second quarter with RBC’s affordability measures falling between 0.4 and 1.4 percentage points. The measures have retreated considerably since their peaks early last year. However, they are still some distance above long-term averages, although these averages might have been depressed by previously unfavourable migration flows that have since been reversed. Certainly, the current levels of affordability do not appear to have been an obstacle to buyers taking the plunge in recent months. Sales of existing homes in the province have rebounded smartly, up by more than 50% since their low in March. If sustained, this will eventually heat up property prices, which are still trending modestly, lower.

This graph shows the recent affordability trend for the four Saskatoon housing types that RBC tracks and reports on, in comparison to the historical norm for the area. The figures shown on the graph represent the “proportion of median pre-tax household income required to service the cost of mortgage payments (principal and interest), property taxes and utilities” on the various housing types. So, of course, the lower the figure, the more affordable the homes are.

Saskatoon housing affordability trend compared to long-term historical norm

Saskatoon housing affordability trend compared to long-term historical norm.

Read the full RBC report here.

Thanks for the heads up to my friend Larry Yatkowsky who runs Yatter Matters where he blogs about the Vancouver real estate market.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Real estate geeks can follow our daily updates on Twitter @Norm_Fisher.

Our Saskatoon home search tool offers MLS listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Housing affordability trend turns on lower rates and higher incomes: RBC

Here are a few of the highlights from RBC’s recent Housing Trends and Affordability study released yesterday.

As we head into the all-important spring season, the ongoing cyclical correction will put the entire housing sector to the test. However, while the pain will likely persist for many homeowners and industry participants, there are encouraging signs on the affordability front in light of developments through the fourth quarter of 2008. The sharp deteriorating trend in RBC’s affordability measures from about 2004 to late 2007-early 2008 has reversed in the past year. At the national level, the RBC measures improved 2.3 to 3.5 percentage points between the final quarters of 2007 and 2008, with markets in Alberta and British Columbia showing more sizable repair (although this largely reflects the extent of the earlier impairment).

The improvement can be primarily credited to monetary policy during that period because lower mortgage rates account for the largest portion of the reversal in RBC’s measures in almost all major urban areas in Canada except for cities in Alberta. Rising family income also contributed positively across the country.

Only in Calgary, Edmonton and Vancouver was price a constructive factor in the year-over-year change – although price has played a wider beneficial role in recent more quarters. Higher utilities and property taxes have remained a modest undermining factor.

Going forward, low mortgage rates and persisting downward pressure on housing prices will continue to help repair affordability, but slowing income growth will act as a restraint.

Saskatchewan — Boom is over but no bust

The housing boom is officially over in Saskatchewan. Market activity has cooled considerably from the frenzied pace of 2006-early 2008 and prices have begun to come off the heights they reached during their spectacular run-up. However, the post-boom period so far has been a mostly orderly affair thanks to the province’s largely supportive economic and demographic fundamentals (Saskatchewan’s economy is the strongest in Canada and is forecast to remain so during 2009). These positive factors overshadow extremely poor affordability levels that have resulted from the spike in prices of recent years. While lower mortgage rates, income gains and, in more recent quarters, lower prices have helped improve affordability in the past year, RBC’s measures remain at worrisome levels compared to historical averages. This represents an element of risk if the province’s economic performance is weaker than expected.

Read to entire report here.

Good news, bad news for home buyers: Star Phoenix

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @Norm_Fisher.

Norm Fisher
Royal LePage Saskatoon Real Estate

Saskatchewan housing suffers hangover following last year’s party: RBC

RBC’s recently released “Housing Trends and Affordability” study suggests that housing affordability in the province saw some modest improvements over the third quarter but the Saskatchewan housing market is experiencing a “hangover” after a year of partying hard.

“Like Alberta and British Columbia before it, Saskatchewan is about to feel the downside of frenzied markets. Housing demand in the province greatly benefited from the red-hot prairie economy (thanks largely to strong demand and prices for commodities) and the inflow of people into the province. However, housing markets got carried away as skyrocketing prices significantly overstepped historical relationships with household income. RBC’s provincial affordability measures spiked in all housing segments last year, reaching the poorest levels on records dating back to the mid-1980s. As is often the case, a wild party ends with a hangover and Saskatchewan’s fête last year will be no different. Housing resales and prices are already showing clear signs of weakening. More is likely to occur.”

Take two Tylenol and call me in the morning.

Read RBC’s Housing Trends and Affordability study here.
The Star Phoenix covers the story here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate

Saskatchewan to lead nation for economic growth: RBC

Saskatchewan to Lead Nation for Economic Growth: RBC EconomistHistorically high commodity prices will push Saskatchewan to a leading growth position amongst Canadian provinces this year, according to RBC economist Paul Ferley.


Speaking to a group of RBC clients in Saskatoon on Friday, Ferley noted that a “wide range of commodities” are experiencing higher prices. He’s predicting that uranium, potash, wheat and oil production will push Saskatchewan’s economy forward by 3.5 percent in 2008, and 3.25 percent in 2009, compared to national growth rates of 1.5 percent and 2.5% respectively.


The Saskatchewan economy was the subject of much speculation in 2007, but ultimately underperformed on the most bullish predictions, which had forecast real GDP growth between 4 and 4.8 percent. Saskatchewan’s real GDP growth came in at 2.8 percent, just slightly above the national average. However, Saskatchewan’s nominal GDP growth through 2007 was exceptionally strong at 11.4 percent, topping all provinces except Newfoundland and Labrador. Real GDP measures changes in production, while nominal GDP measures the actual dollar value of the economy. You might say that we worked 2.8% harder, but earned 11.4% more.


Read the Saskatoon Star Phoenix story by Wendy Gillis here.


Read also: Saskatchewan Economy Underperforms on Expectations

Read also: The Rest of the Economic Growth Story

Read also: Saskatchewan Could Become an Embarrassment of Riches: RBC

See a Google map displaying the boundaries of Saskatoon real estate “areas” here
Data collection and calculation for our statistical reports

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate