The Canadian Association of Accredited Mortgage Professionals (CAAMP) released their latest statistics earlier today and one of the most interesting to me was a table produced by RBC doing a quarterly analysis of housing affordability across this great country of ours.
It’s important to have tools and research like this, because often we simply look at average house prices in a market and determine for ourselves, without doing our homework, whether or not prices are too high or too low.
Price is one important determinant, but of course, affordability is most important because it takes into account prices AND incomes, which vary quite drastically from province to province and even city to city.
The RBC data is interesting because it shows affordability for most of the major markets as it currently stands, but also shows a historical average – which should be a good indicator of whether or not a particular market may be poised for a correction – up or down – in home values.
This is also a very useful table for pointing out how useless (and lazy) analysis that purports to speak for the “Canadian market”, when, in fact, there is no such thing. Real estate, jobs, and other economic indicators can be lumped together and averaged out to give you a Canada-wide metric, but making useful decisions based on that information is a lot like saying, “Gee, it sure is cold out in Toronto right now, so I guess I won’t go outside in Victoria.”
As you can see from the table below, it appears that affordability in BC, and Vancouver specifically, is quite poor compared to the historical average (which is already quite a bit higher than many markets). I noticed a similar situation in Montreal and Toronto, while Alberta, largely due to a large number of price drops over the past while, is actually more affordable than we would expect to see based on the historic average.
I’d love to get your thoughts in the comments section or on our Mortgage Facebook Page to see what you think.