Alberta housing affordability peaked in 2007: report

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Alberta housing affordability peaked in 2007: report
2 m6 o# a* E# [Mario Toneguzzi, Calgary Herald
Published: Friday, March 14, 2008
8 j6 {% p( `4 O# u3 p; h' P& DCALGARY - It's premature to get too concerned, but Alberta's housing market is on watch for possible further negative developments, says a national real estate report released today by RBC Economics.

! V& R( r' q3 Q* `. EThe housing affordability report says the average price of a standard two-storey home in the province fell by 4.3 per cent last quarter (2007) over the previous quarter. Bungalow prices fell by 7.3 per cent, townhomes were off by four per cent and condos fell by 5.3 per cent in their second consecutive quarterly dip.
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4 [' @/ x( O' _) ?" QThe report says affordability in Alberta appears to have peaked about midway through last year. Healthy income gains (five per cent year-over-year in the final quarter of 2007) and declining house prices led to overall affordability improvements for new homeowners trying to "tap into the overvalued Alberta market."
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"This marks the first time in over three years that the market has witnessed a broad-based affordability improvement across all home segments," says the RBC report. "This also marks the start of what we fear could become a trend.
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"All of the key housing measures are in contraction mode right now including house prices, housing starts and resale activity. The sales-to-new listings ratio has swung dramatically from deep seller's territory into a more balanced state and has remained in steady balance for the last six months. Further improvements are expected as the market continues unwinding and mortgage rate relief materializes."
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The report says the price of the benchmark two-storey home is still 63 per cent higher than two years ago, "and one quarter does not make a trend," but  the year-over-year pace of price gains has gone from about 50 per cent a year ago to 11 per cent today.
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"Furthermore, the sales to listing ratios in Calgary and Edmonton remain at about 0.4, or about half the peak recorded over the past two years, which points to the risk of further price cooling in a market with more slack," adds the report.

Nationwide, housing affordability deteriorated in every consecutive quarter throughout 2007 to end up at its most unaffordable level since the housing bubble peaked in 1990. But RBC says only Alberta bucked the trend in the latest quarter. Outside of the province, affordability deteriorated in every single market and for each type of housing.