Posthaste: Affording a home in Canada has never been tougher, with one city in 'full-blown crisis'

financialpost.com:

The latest edition of the Royal Bank of Canada‘s housing affordability measures makes for some grim reading.

According to the report, it has never been tougher to afford a home in Canada, and at least one city is in “full-blown crisis.”

Though it paused last summer, the Bank of Canada‘s “historic” hiking campaign continues to weigh on the housing market, with high interest rates pushing home ownership costs to new heights in the fourth quarter of 2023.

A household now needs to spend a “staggering” 63.5 per cent of the median income to cover the cost of owning a home at the average market price, up from 61.8 per cent in the third quarter, says Robert Hogue, assistant chief economist at RBC.

Home prices nationally have fallen slightly, but the soaring cost of interest has more than made up for it.

RBC calculates that the monthly mortgage payment on the composite home valued at $796,300 increased by $125 or 3.3 per cent last quarter to $3,990. Meanwhile, home prices dipped just 0.5 per cent from the quarter before.

Housing affordability deteriorated in all the markets that RBC tracks, with Vancouver, Victoria and Toronto getting the worst of it. But Ottawa, Montreal and Halifax are also at or near the worst levels of affordability ever.

“It’s never been as expensive to own a home anywhere, anytime in Canada as it was in Vancouver in the fourth quarter, said Hogue, who says the city is in “full-blown crisis.”

Covering ownership costs here takes 106.4 per cent of the median income, meaning that buyers have to make a really high income or save or receive considerable wealth to put towards the purchase.

This has narrowed the pool of buyers significantly and kept sales soft and prices flat, a situation that RBC sees continuing