It’s a bit premature to say houses in Canada are affordable again ― in fact, it’s way too premature to say that ― but … the latest housing affordability monitor from National Bank of Canada shows the cost of owning a home, relative to income, saw its steepest drop in a decade in the second quarter of this year. The last time affordability improved this much, it was due to a sharp slowdown during the financial crisis of 2008-09. This time around, it’s falling mortgage rates, combined with rising wages. It took 45.1 per cent of an average household’s income to afford the mortgage on a median-priced home in the 11 major cities covered by the report, down from 48.7 per cent in the space of just three months. Still, it’s well above the 30-per-cent mark that is generally considered affordable.
Commentary: The critical line in this article (and unlike its misleading headline), is: “Most potential buyers excluded by (the mortgage stress test) still are,” [National Bank economists] wrote. CHBA will continue to call on the current government and opposition parties alike to adjust the stress test to better align it with current market conditions and the plight of first-time buyers. Learn more about CHBA’s recommendations to improve housing affordability by reading CHBA’s submission for the House of Commons Finance Committee’s consultation for Budget 2020