RBC: Low Rates & Income Growth Offsetting Rising House Prices

RBC report

RBC Housing Trends & Affordability Report

“Owning a home became more affordable in virtually all provincial and major local markets despite increasing prices [in Q2],” according to RBC’s Housing Trends & Affordability report released today.

“In fact, even areas, such as Calgary, Toronto, and Vancouver, that saw solid price gains during the second quarter enjoyed improved affordability.”    Reason being?    “Fixed mortgage rates (posted)  fell the most in almost four years in the second quarter of 2014.”

Below is the excerpt for Alberta:

Alberta – Good times keep on rolling
Alberta’s housing market was still on a roll in the second quarter. Home resales increased for the fifth time in the past six quarters, registering their fastest quarterly advance in nearly four years. Second-quarter resales were the second-best on record (unadjusted for seasonality) in the province.

The good news for homebuyers was that the supply of homes for sale finally increased meaningfully. New listings jumped by 12% in the second quarter (relative to the first) to a multi-year high. This long-awaited supply response helped ease some, albeit not all, of the ongoing market tensions.

Alberta has been a sellers’ market since the latter part of 2012, which led to rapid price increases in areas such as Calgary in the past year, yet escalating prices largely have been taken in stride by homebuyers. Solid growth in household income provided substantial offset, such that affordability continued to be attractive. Affordability improved modestly in the second quarter, with RBC’s measures for Alberta easing between 0.2 and 0.9 percentage points.

You can download the entire report here pdf

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