Canada's Condominium Magazine
Becoming the owner of a single detached home in Toronto or Vancouver became a little less possible in the second quarter of this year, but in other parts of the country affordability improved slightly. Generally, according to the latest RBC housing affordability report, trends have been “fairly flat” since 2010. Outside of Toronto and Vancouver, affordability levels are near long-term averages, showing limited signs of “undue stress” on homebuyers. Condominiums remained the most affordable home ownership option right across the country.
On the national scene, Calgary stands out for its slumping sales and prices, both of which were reported to be down sharply in August. Condo sales were down 38.1 per cent, with prices dropping 11 per cent. Detached home sales fell off by 20.7 per cent compared to one year ago. The Calgary Real Estate Board says the city is a buyers’ market for condos now, making it an excellent time to get into the market. The board tries to make the best of a bad situation, advising homeowners who are worried about their home values to wait out the “energy recession” and try to get their personal finances in good order in case unemployment “comes knocking.”
Back in Toronto, as usual it’s rising prices that have some worried, but not so much RBC. Affordability continues to diverge between detached homes and condos. RBC’s affordability readings for bungalows and two-storey homes reached 24-year highs, at 46.5 per cent and 52.3 per cent respectively. Condos, however, had a 28.8 per cent affordability score, a reflection, in part, of the shift in the home construction mix in Toronto. There are half as many single-family homes being built today as there were ten years ago, and condos are “filling the void.” This relative scarcity of single detached homes means that the trend to diverging affordability between low-rise and high-rise housing is likely to continue, RBC says.
Clearly, owning a single-detached home in Ontario at market prices has become a stretch for a typical household in key parts of the province such as Toronto. On the other hand, owing a condo apartment still appears to be within reach based on the fact that RBC’s measure (28.8%) is still just slightly above its long-run aver- age (27.6%). To a large extent, diverging affordability trends reflect the shift in the mix of new construction in the province toward multi-unit structures, with about half as many single-family homes being built compared to 10 years ago and booming condo construction filling the void.
Real estate analyst Ben Myers writes in the Toronto Sun that Toronto has changed, and homebuyers’ expectations have to change as well. In 1995 the average price of a new detached home in the GTA was about $300,000; in 2015, he says, new detached homes sold for $1.9 million in the city of Toronto, up 31 per cent from last year. There’s no avoiding it, Myers writes; these prices are set by the “fundamental laws of economics, supply and demand.” Those who dream of owning their own home may have to “get creative” and look at other options.
RBC projects home prices to rise by about the same rate in 2015—4.6 per cent—as last year (4.8 per cent). Home resales will rise by 5 per cent across Canada, with strong gains in BC, Ontario and Quebec offsetting losses in Alberta (down 17.8 per cent) and Saskatchewan. All told, it will be on of the best years on record for the housing market in Canada.