In a report issued by the Royal Bank of Canada, Canadian homes are less affordable than they have been in recent times. More so, affordability stats have dropped to the lowest levels since 1990. At that time, the country slid into a recession.
According to the report, a standard two storey home is about half of the cost of the pre tax income of the average Canadian family.
The reports are even worse for Vancouver. There, the housing payment is likely to be as high as 74% of the household income. Toronto came in next most expensive with property there being about 47% of the average Canadian's pay check. Calgary's affordability was at 42%, Montreal at 37% and Ottawa came in at 32%.
Several factors are being attributed to this including the rise in housing prices there as well as the strong amount of economic expansion the region has seen. Additional factors including the expanding job market. In this report, the Royal Bank of Canada measures how much is needed to own a home in Canada based on pre tax household income.
Interest rates in 1990 as well as an economic recession made the housing affordability levels drop, something not seen in today's market at this point. As reported by The Globe and Mail, Derek Holt who is the assistant chief economist at the Royal Bank of Canada had this to say. "Today, a long upward trend in house prices driven by sounder macroeconomic fundamentals, like job growth, is primarily responsible."
