New report shows energy uncertainty creating options for buyers
For Calgarians looking for a new home, the financial cloud hovering over the province’s oil patch may have a silver lining.
According to RBC’s latest Housing Trends and Affordability Report, homes in the city became more affordable during the first quarter of 2015.
The bank’s index, which measures the percentage of household income required to service the price of owning a home, showed costs in Calgary fell across all housing types in 2015.
Laura MacKinnon is one of those who plans on taking advantage of the current market. Already having walked away from a previous offer, MacKinnon has yet to find the home of her dreams. However she’s convinced conditions will contribute to a solid purchase.
“If anything, I think it’s made it easier for me,” she said. “Unlike last year when a spot was listed and sold in a day, this year I can look at several options, ruminate about it, go back to look at it again, then decide. This is the only way I know. If I’d been in the market last year, I’m sure I’d be singing a different tune.”
While MacKinnon is enjoying the less stressful state of affairs, she’s still confident any eventual purchase will be a good decision in the long run.
“I know it’s a great long term investment, and Calgary is an amazing city to invest in. I’m still loving my house-hunting adventure. Everything happens for a reason, so I’m OK with not closing on that first place,” she said. “It makes me excited to see what else is out there.”
RBC’s measures for Calgary declined across all categories, including a drop of 0.6 per cent to 19.4 per cent for condos, 1.5 to 32.6 per cent for two-storey homes and one to 32.8 per cent for bungalows.
The number placed Calgary tops for affordability amongst the six centres included in the report.
“Yes [affordability is improving] and it’s not a surprise because we’ve had two things happen: you’ve seen that reduction in lending rates, and as well our prices have also moved down,” said CREB® chief economist Ann-Marie Lurie.
“So naturally, that would make it more affordable, especially because wages haven’t changed much at this point.”
Looking to its long-term projection for the Calgary market, RBC senior vice-president and chief economist Craig Wright said while buyers still may be hesitant, the overall outlook may be on the rise. “Calgary’s improving housing affordability may not be enough motivation for home buyers at this point in time as there is still uncertainty about global oil markets and Alberta’s economy in general,” he said.
“Still, recent developments suggest that housing activity stabilized in spring, and the market will be shaped by news on the economy and the job market in particular over the coming months.”
In May, Calgary’s residential unadjusted benchmark prices improved over the previous month for the first time since December 2014. Within the city, average benchmark prices totaled $454,100, a 0.55 increase from April and 0.96 per cent compared to the same time last year.
Sales in the city have yet to show a similar rebound, with year-over-year transactions falling by 25.5 per cent in May.
Compiled since 1985, RBC’s Housing Affordability measure is based on the calculated costs of owning a home, including mortgage payments, utilities and property taxes at market value. The higher the reading, the more difficult it is to afford a home at market values. For example, an affordability reading of 50 per cent means home ownership costs would take up 50 per cent of a typical household’s monthly pre-tax income.
Vancouver retained its position in the report as Canada’s most costly city to purchase a home. According to RBC, purchasing a detached bungalow in the city required an extra 2.8 per cent of household income in 2015, meaning the average Vancouverite would need to part with 85.6 per cent of their household income.
Coming in second last was Toronto, where a detached bungalow would take up 57.3 per cent of household income.
While Edmonton was tied with Calgary for servicing costs on a detached bungalow, costs for both two-storey and standard condominiums surpassed those in Calgary at 35.4 and 19.9 per cent, respectively.