Affordable Calgary is hot

Calgary remains one of the most affordable housing markets in Canada, despite a slight deterioration in affordability in the third quarter of 2014.In RBC Economics Research’s latest Housing Trends and Affordability Report, released Nov. 26, housing in Canada became more affordable in the third quarter, thanks in large part to a decline in mortgage rates.Low and steady interest rates“Owning a home was a bit easier in Q3 thanks to rising household incomes, low and steady interest rates and cheaper utility costs in many parts of the country – Toronto even saw some relief,” says Craig Wright, senior vice-president and chief economist, RBC. “With home resales sitting close to the highest levels since early 2010, the overall tone of Canada’s housing market is quite solid at this stage.”The way RBC’s affordability measures work is, the higher the measure, the more difficult it is to afford a home. For example, an affordability measure of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household’s pre-tax income. A decline in the measure represents an improvement in affordability.Alberta remains attractiveFor Alberta, affordability remains attractive, even though the measure increased slightly in two out of the three housing categories monitored. RBC’s measures climbed by 0.4 percentage points for both bungalows and two-storey homes, to 32.2 per cent and 33.7 per cent, respectively – meaning it became less affordable. The measure for condos eased by 0.2 percentage points to 19.9 per cent, the lowest level among the provinces.Calgary: the boom continuesFor the Calgary market, specifically, “the boom continues,” RBC says. Resales set back-to-back quarterly record highs in the past two quarters. Demand still outweighs available supply in the area (albeit just modestly less so than earlier this year).Calgary prices continue to rise at the fastest pace in Canada (between nine and 12 per cent year-over-year depending on the housing type). Housing affordability deteriorated slightly in all three categories in the third quarter – up 0.6 per cent to 34.2 per cent for bungalows (meaning it became less affordable); up 0.4 to 34.3 per cent for two-storey homes; and up 0.3 per cent to 20.1 per cent for condos.Despite the sight deterioration in affordability, housing in Calgary remains quite attractive from a historical perspective and compared to other Canadian cities, and is being preserved by the high and rising levels of household income in the area, RBC says.Related readingIn this Battle of Alberta, Edmonton winsCalgary is hot, and here's whyCanada's hottest real estate market? You might be surprised