Home ownership became slightly more affordable in the second quarter of the year in Canada but it remains 'impossibly high for many,' a new RBC report says.
RBC says this measure fell 0.3 percentage points in the second quarter, with home ownership costs making up 59.5 per cent of median household income.
But Hogue writes that the "near term outlook is likely to disappoint," as incomes "take a back seat" to higher mortgage rates and increasing prices."That said, we see a turning point taking shape once rates and prices stabilize. We think an improving trend will emerge in 2024, and more clearly so after the Bank of Canada starts cutting rates — around mid-year in our view.
The current state of housing affordability is behind what Hogue calls a "notable cooling" in home resales this summer in Ontario and British Columbia, which could affect demand for months as a lot of buyers are "entirely priced out in Vancouver and Toronto."But, "it will take years and concerted efforts to restore affordability," he says.
"Short of a housing crash that would destroy property values or an unexpected about-face in monetary policy, any progress in restoring housing affordability is likely to be slow," Hogue writes. "Supply must increase by giant leaps to make a material difference. But building new homes takes a long time — up to several years in the case of large condo apartment complexes. And it's increasingly hard to build units ordinary Canadians can afford to buy given soaring construction costs and finite construction capacity."on the construction of new rental apartment buildings a "step in the right direction.
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