Housing Affordability is forecast to improve in 2008
The market is expected to continue on its current softening path into 2008. The cooling is expected to remain steady and controlled, just as it has been since peaking in 2003. Affordability continued to deteriorate across all home segments last year but remains well below peaks reached in the late 1980s housing bubble.
RBC anticipate the deteriorating trend to begin to reverse in 2008 as house price growth continues to moderate and some modest mortgage rate relief materializes. The fundamentals driving markets are expected to soften in 2008 but still remain largely intact with the unemployment rate holding at historically low levels and income gains growing at a healthy pace.
The active condo market witnessed rapid price growth last year and a corresponding surge in construction activity. With an increased supply of multiple units coming to market, pressure on the condo market should gradually ease during the next few years.
Toronto – Balanced market guides controlled cooling
The average price of a Detached bungalow in Toronto in 2007 (Q3) was $418,511 (an Y/Y increase of 5.2%). It took qualifying household income of $99,412 to afford this house, affordability measure 46.3%.
The average price of a standard two storey house in Toronto in 2007 (Q3) was $481,315 (an Y/Y increase of 7.8%). It took qualifying household income of $114,834 to afford this house, affordability measure 53.4%.
The average price of a standard townhouse in Toronto in 2007 (Q3) was $325,644 (an Y/Y increase of 9.3%). It took qualifying household income of $77,803 to afford this townhouse, affordability measure 36.2%.
The average price of a standard condo in Toronto in 2007 (Q3) was $291,924 (an Y/Y increase of 12.1% ). It took qualifying household income of $69,368 to afford this condo, affordability measure 32.3%.
In terms of square footage, a standard condo has an inside floor area of 900 square feet, a town house 1,000 square feet, a bungalow 1,200 square feet and a standard two-storey 1,500 square feet.
The measures are based on a 25% down payment and a 25-year mortgage loan at a five-year fixed rate and are estimated on a quarterly basis for each province.
The higher the measure, the more difficult it is to afford a house. For example, an affordability measure of 50% means that home ownership costs, including mortgage payments, utilities and property taxes, take up 50% of a typical household’s pre-tax income.
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Local Data Matters
Housing affordability is a major index when it comes to real estate. The higher the measure, the more difficult it is to afford a house. and vice versa. Before you look at average data/reports, it is prudent to consult with the local Realtor for detailed analysis of neighbourhoods and prices on your street or condominium in Mississauga Toronto area.
Canadian real estate market reports and MLS data across Canada can be too overwhelming data when considering local real estate buying, selling or investing. Local real estate information and resources about job growth, demography trends, net immigration, neighbourhoods, knowledge of condominium complexes, rental markets, vacancy rates, infrastructure development, builders, real estate prices on a specific a street or reputation of builder matters most.
Local real estate information is essential to owners and buyers intent on keeping a “pricing” finger on the real estate pulse. Consult with me, if you are looking to buy, sell, invest or rent a home or condo in West Mississauga or Mississauga Downtown.