“While housing activity was expected to rebound naturally from weather-induced weakness this winter, the drops in mortgage rates and resulting improvement in affordability this spring gave the market extra energy,” RBC’s Housing Trends and Affordability Report, released Thursday, states. “Home resales picked up solidly in May and June, contributing to a 9.4 per cent quarterly advance in the second quarter, the strongest gain in nearly four years in Canada.”
Affordability in one major market rebounded slightly, though not enough to reverse the ongoing trend of affordability deterioration in one province.
“Ontario’s homebuyers don’t appear to be overly concerned by affordability issues at present mainly because of lower mortgage rates – home resales picked up in the second quarter by 13 per cent relative to the first quarter,” said Craig Wright, senior vice-president and chief economist for RBC. “This corroborates the argument that the deterioration in the first quarter was driven more by poor winter weather than any underlying weakness.”
For its part, one of Canada’s hottest – and priciest – markets continues to be out of reach for many homebuyers.
“Conditions in Toronto’s housing market continue to favour sellers, and accordingly, sustain a strong bid on property values,” added Wright. “Developments in the latest quarter did virtually nothing to stem the steady erosion in housing affordability we’ve seen in the market since 2009.”
RBC’s affordability measures edged lower for all housing types in Ontario for the second quarter of this year.
“RBC’s affordability measures eased by 0.2 percentage points to 44.7 per cent for bungalows, and by 0.1 percentage points for both two-storey homes and condominiums to 50.9 per cent and 29.3 per cent, respectively,” the reports states.
Good rates in the spring can be thanked for an influx in broker business but is the trend set to continue?