The Royal Bank of Canada released their August Housing 2015 Housing Trends and Affordability Report. Housing Prices in Vancouver continue to be ridiculous, with ownership costs for a Two-storey property rising to 48.3% of income. Like Toronto, prices are high, continuing to be high, and expected to be high for some time.
The rest of Canada has remained fairly steady, with RBC stating:
“Trends in the national measures have been fairly flat since 2010. Affordability levels are close to or slightly above long-term averages, which suggest that except for Toronto and Vancouver, housing affordability remains fairly neutral in Canada.”
RBC’s Chief Economist, Craig Wright, spoke of prices out-of-step with market fundamentals.
“Poor housing affordability at the provincial level, particularly in the single- detached home segment, is a reflection of the extreme situation in Vancouver” …
“Vancouver’s housing affordability readings are nearing the worst levels ever recorded in Canada, but this is still not reining in buyer demand at all … Given the current high degree of tightness in the market, further price acceleration and affordability deterioration are even very likely in the near term.”
When the speculative bubbles ramped up in the United States, one of the indicators was a decrease in affordability and an increase in prices without a change in the underlying fundamentals. Might these be a sign of a similar situation in Vancouver and Toronto?