Manitoba leads affordable homes list - Remains fraction of prices elsewhere
By Murray McNeill
If Manitobans are feeling shell shocked over the spiralling cost of home ownership, they'll be blown away by what's going in British Columbia.
An RBC Economics report released Thursday says housing affordability reached a new low late last year on the West Coast when the cost of owning a standard two-storey home -- including mortgage payments, property taxes and utilities -- was devouring 70.8 per cent of the pre-tax household income of a homeowner earning $122,134.
In Vancouver it was worse, with home ownership costs gobbling up 75.2 per cent of the pre-tax household income of someone with household earnings of $138,309.
"The least affordable housing market in the country entered uncharted waters last year, as affordability deteriorated to the highest level on record (we started tracking conditions in 1985)," the bank said.
Even though Manitoba has long had a reputation for being one of the most affordable housing markets in the country, the chasm with the most expensive has never been greater, according to the RBC report.
The numbers show that after five consecutive years of double-digit house price increases, the cost of owning a home here is still only a fraction of what it is in high-priced British Columbia, Alberta and Ontario.
Commercial real estate agent Darcy Payne discovered that firsthand when he and his family moved to Winnipeg last year from Calgary.
The general manager of the new Winnipeg office of Bentall Real Estate Services said he and his wife, Jennifer, discovered a house that would have cost them $500,000 in their middle-class neighbourhood in Calgary costs only about $300,000 to $350,000 in a similar neighbourhood (Whyte Ridge) in Winnipeg.
Payne said they'd heard tales about how much cheaper homes were in Winnipeg, so they were expecting prices here to be even lower than they were. But still, they weren't complaining.
"Generally, we were happy with what happened," he said.
The RBC report says new records were set late last year for the amount of household income going towards home ownership costs in a number of Canadian markets, including British Columbia, Alberta and Saskatchewan.
Manitoba, meanwhile, remained the most affordable market for most types of homes. The only exception was with bungalows, where Atlantic Canada narrowly edged out Manitoba as the most affordable market for that type of home.
There, owning a bungalow ate up 31.6 per cent of the pre-tax household income of someone with a qualifying income of $45,951, compared to 33.9 per cent for someone in Manitoba with a qualifying income of $55,719, the bank's figures show.
But with the other three major types of homes -- standard two-storeys, standard townhouses and standard condominiums -- Manitoba was still the most affordable market. The housing affordability index for a standard two-storey home was 35.6 per cent of pre-tax household income, for a townhouse it was 20.4 per cent, and for a townhouse it was 18.9 per cent.
And the good news is that homeownership here, and in most other parts of the country, should become even more affordable this year because of falling mortgage rates and moderating house prices, the bank said.
Derek Holt, the bank's assistant chief economist, said Manitobans should be looking at an average selling price increase of about eight per cent this year compared with 11 or 12 per cent in 2007 and nearly 20 per cent in 2006.
And short-term and variable-rate mortgage rates should be down a full percentage point by the end of the year, while long-term rates should be a half to three quarters of a percentage point lower.
Holt said almost every housing class in every province, including Manitoba, saw affordability deteriorate in 2008. And the main culprit was a long string of house-price gains that outstripped income increases in most markets.
But even in the once red-hot B.C., Alberta and Saskatchewan markets and the still-hot Manitoba market should see more modest price gains this year, he said.