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Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

June 8th - 2004

Affordability keeps market from “bubbling”

Supply remains low and prices continue to rise in the current housing market.

Supply remains low and prices continue to rise in the current housing market. Are we seeing another bubble market emerge like the one that eventually burst in the late 80’s?

Not according to the RBC (Royal Bank of Canada) Housing Affordability Index. “In the late 80’s buyers were driving prices with their speculation,” says Carl Gomez, Senior Economist with RBC. “Today, sellers are driving market prices, but affordability is still high.”

Gomez presented stats from the latest RBC Affordability Index to delegates at the Canadian Real Estate Association’s annual conference in March. The index measures affordability levels across Canada by looking at the proportion of pre-tax household income taken up by home ownership costs. The report also provides commentary and outlook for regional housing markets.

The outlook for the housing markets in 2004 is good according to this latest index. Housing affordability eroded only slightly from 31.9% to 32.2% in the last quarter of 2003. Despite the fact that housing prices have increased by 30% since 1998, Gomez says there is no bubble to be burst. “In 1990, affordability levels were at an all time high of 50.9% compared with an all time low of 30.5% in 2001 and we are still at record lows today. Strong housing fundamentals are supporting the market this time around,” says Gomez. “Price gains are not speculative, mortgage rates are at historical and competitive lows and we’ve seen strong household income gains through the late 1990’s.”  

The report also predicted that sales will be strong during the first half of 2004 and that affordability will eventually erode as interest rates rise.

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Outlook for Ontario Multiple representation OK under draft REBBA regulations

For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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