Posthaste: Owning a home 'huge, if not impossible' stretch for many households in these Canadian cities

financialpost.com:

Good morning,

The good news is that owning a home in Canada became a little more affordable for the first time in almost three years.

RBC’s aggregate affordability measure, which tallies the share of median pre-tax income needed to cover home ownership costs, dropped nationally in the first quarter, down 1.6 percentage points to 59.5 per cent.

That means it takes about 60 per cent of a median income to cover the mortgage payments, taxes and utilities on a single-family home at the benchmark market price.

Last year affordability worsened as the Bank of Canada’s aggressive round of interest rate hikes kept the pressure on borrowers even as home prices dropped. The increase in mortgage rates added 4.3 percentage points to the measure (an increase is a decline in affordability) while falling home prices subtracted just 2.1 percentage points.

But when the Bank paused its hikes after its January meeting it gave homebuyers some “breathing room,” albeit temporarily, writes RBC assistant chief economist Robert Hogue in his report.

The policy shift stabilized mortgage rates and allowed the housing correction to lower ownership costs in the first quarter.

The bad news is challenges ahead could stall or even reverse these slight gains in affordability.

First the housing market has rebounded much faster than expected. RBC economists had thought it would take until the fall for prices to rise, but increased demand and low inventories have tightened conditions much faster than forecast.

In May, Toronto home prices rose for the third month in a row and the 3.2 per cent gain was the biggest since the market peaked in February 2022.

The Bank of Canada’s return to hiking also complicates matters. The Bank raised its rate to 4.75 per cent