B.C. housing improves in ‘affordability’

Thursday, August 21st, 2003

Still Canada’s most expensive urban market, Vancouver’s index rating declined by 1.1%

Ashley Ford

CREDIT: CanWest News Service A happy homeowner celebrates a sale with her real-estate agent.

Here’s something refreshing.

Housing affordability in B.C. has actually improved, thanks mainly to continuing low mortgage rates.

That, says RBC Economics in its latest national Housing Affordability Index, is despite B.C. having the highest prices in Canada.

Vancouver has the dubious honour of the country’s most expensive urban real estate.

Despite this, the last quarter saw the city’s Affordability Indicator edge down to 44.3 per cent, which translates to an average monthly cost of $1,877, 1.1 per cent lower than the previous quarter.

The Index, which RBC has compiled since 1985, is based on the costs of owning a detached bungalow, which is a typical target home for first-time buyers.

The B.C. index fell to 41.2 per cent in the second quarter of 2003, from 41.7 per cent in the previous quarter.

Despite a still dodgy provincial economy, B.C. continues to have the tightest housing inventory in Canada.

Bob Rennie of Rennie Marketing Systems says the findings are not really surprising despite the ongoing heavy Lower Mainland housing demand.

“What we are seeing is developers becoming more sensitive to market demographics and reacting with product that will allow first-time buyers to convert their rental dollars into mortgage and ownership dollars.”

He doesn’t see that situation changing for at least the remainder of the year.

Indeed, latest numbers show supply levels are at their lowest in 18 years, again hardly surprising given interest-rate levels are at a 45-year low.

And all this comes despite a 15-per-cent surge in housing starts over last year.

“As long as mortgage rates remain low, B.C. will likely register another solid year of housing activity thanks to the deep pool of pent-up demand,” says RBC economist Carl Gomez.

But he cautioned that over the longer-term mortgage rates would eventually rise.

When that happens, the market will only be sustained by a stronger economy, more jobs and income growth, he says.

RBC says Canadian home ownership costs ranged from a low of $901 per month in the Atlantic region to a high of $1,570 per month in B.C.

© Copyright 2003 The Province

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