Calgary housing among most affordable
By Mario Toneguzzi
Calgary Herald August 23, 2011
Owning a home in Calgary may be expensive for many people but a report suggests housing affordability in the city is among the lowest in the country for major centres.
And with interest rates now expected to remain at a low level, Calgary's affordability will continue to be remain that way, say industry experts.
A report by RBC Economics, released Monday, said Calgary's housing affordability actually deteriorated in the second quarter of this year compared with the previous quarter but affordability in the city is better than the national average for detached bungalows, standard two-storey homes and standard condominiums.
Sano Stante, president of the Calgary Real Estate Board, said prevailing negative economic conditions will restrain any increases in interest rates for awhile.
"Those are increases that we fully expected prior to these events and they've now been abated," said Stante. "That was our biggest risk of deteriorating affordability.
"With an assurance that interest rates are going to stay low for the next 12 months anyway - and there's somewhat of an assurance of that - then it really looks like we're going to lead the nation in affordability especially when we start to get increased employment and in-migration towards the end of this year. That should really lend to a more robust real estate market."
Robert Hogue, senior economist with RBC, said he too expects Calgary's affordability to remain about the same.
"Previous to a few weeks ago we expected higher interest rates would start really putting more and more pressure across the board in Canada including in Calgary on the monthly costs of home ownership," he said. "Now we've pushed everything out to the middle of next year. "
The RBC Housing Affordability Measure, which has been compiled since 1985, shows the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes and utilities. The higher the measure, the more difficult it is to afford a house. For example, an affordability measure of 50 per cent means that home ownership costs take up 50 per cent of a typical household's pre-tax income.
In the second quarter, Calgary's measures were 37.1 per cent for a detached bungalow, 38.5 per cent for a standard two-storey, and 23.0 per cent for a standard condominium. The measures increased by 0.6 per cent (bungalow), 1.1. per cent (twostorey) and 0.4 per cent (condo).
However, they are lower than a year ago by 3.1 per cent for a bungalow, 2.9 per cent for a two-storey and 1.6 per cent for a condo.
Housing Affordability Q2 2011
Detached bungalow
Legion Avg. price YoY chg. Affordability* Q/Q chg.
Canada $347,600 5.2% 43.3% 1.7%
Alberta $339,500 -2.6% 32.8% 0.7%
Calgary $411,700 -2.0% 37.1% 0.6%
Standard two-storey
Canada $393,100 5.0% 49.3% 1.8%
Alberta $370,300 -1.1% 36.4% 1.3%
Calgary $415,200 -1.6 % 38.5% 1.1%
Standard condominium
Canada $230,000 3.4% 29.2% 0.8%
Alberta $216,200 1.0% 21.3% 0.5%
Calgary $249,000 -1.1% 23.0% 0.4%
*Shows the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes and utilities. Source: RBC Housing Trends and Affordability report
