Housing is Hot But getting expensive

Ontario's housing market bounces back but homeownership gets less affordable, says RBC Economics

TORONTO, Nov. 25 /CNW/ - Ontario's housing market has recovered its past strength with rising home prices contributing to a decline in affordability for the first time since early 2008, according to the latest third quarter housing report released today by RBC Economics Research.

"Ontario's housing market has experienced a remarkable turnaround with price levels returning to and, in some cases, surpassing earlier peaks," said Robert Hogue, senior economist, RBC. "The downside is that rising property values and a modest increase in mortgage rates have negatively affected affordability, after significant improvement over the past year."

Hogue noted that housing affordability improved considerably throughout most of 2008 and the first half of 2009, which has caused many home buyers in Ontario to jump into the market and drive up property values. The RBC Housing Affordability measure for Ontario captures the proportion of pre-tax household income needed to service the costs of owning a home.

In the Toronto area, full confidence in the housing market and a renewed sense of urgency are now fuelling buyers to purchase homes. This has significantly bolstered resale activity, tightened inventories of homes offered for sale and pushed prices higher to near-record levels. Affordability levels have suffered as a result, with RBC's affordability measures for the Greater Toronto area (GTA) rising between 1.0 and 1.9 per cent in the third quarter.

"Affordability levels in the GTA still remain close to long-term averages, suggesting that this real estate rally is likely to continue in the near-term," added Hogue.

David Pylyp Lets read that short paragraph again.

"Affordability levels in the GTA still remain close to long-term averages, suggesting that this real estate rally is likely to continue in the near-term," added Hogue.

Now here is something all the armchair critics can dig in with, all the Bubble heads who are screaming the sky is falling can now refute the conspiracy of the Royal Bank in collusion with CMHC lend money to people without any expectation of receiving interest payments because everyone will default on their mortgages and walk away. Family's need homes.

Instilling furor to a captive audience makes you an evangelist. It does not necessarily make you an expert. I will defer to the Royal Bank and an educated economist over the media's talking heads. I have no future book deal to sell.

My Newest adventures in Mystic Point. I do sell condo and houses in West Toronto