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| British Columbia's housing affordability notably improved but still has far to go, says RBC 5 I6 s/ e( ?' }, _- g& m% |/ m: F    TORONTO, April 16 /CNW/ - British Columbia's housing markets are in the$ e# P/ L/ @4 f3 j- O
 middle of a significant correction that is partly reversing the extensive4 k/ P& g$ Q5 o7 @
 gains of recent years and which is helping restore affordability conditions,
 , S7 r$ g: U' `/ |/ taccording to the latest housing report released today by RBC Economics.
 , V0 _( [' n/ @5 W- i% p- l& o* i, d) |    "The province's housing markets remain under heavy downward pressure,"+ A$ Q6 h( N0 j) c1 V
 said Robert Hogue, senior economist, RBC. "While housing affordability is
 - D1 D) R9 S, S' {improving as the correction process runs its course. RBC's affordability
 4 x6 b, ^& R7 k7 C( \& Fmeasures for the province are still at levels far off historical averages."
 3 T# q4 N) P# A' H- n- F2 O6 ]$ _    RBC notes that the sharp rise in unemployment since last summer is
 # r$ O6 Q) F0 r2 |7 Cworrying households in the province and weighing down demand for housing,
 % f( h5 f. g4 P$ u/ C; N' D# _which runs well short of available supply. Such weak market conditions have) ]  A4 \, e0 U5 j4 H! k8 B
 sustained the declining trend in prices for both existing and new homes." N: y0 k- t! r/ g+ L& {5 f
 The RBC Affordability measure for British Columbia, which captures the
 3 N8 a: U( j" o9 Hproportion of pre-tax household income needed to service the costs of owning a
 0 z4 a8 G$ H- P4 chome, improved across all housing segments in the last quarter of 2008.
 4 w4 \$ [# F- g) w! xAffordability of detached bungalows in the province moved to 66 per cent, the9 |6 P" W. N) t$ R
 standard townhouse to 52.5 per cent, the standard condo to 36.7 per cent, and
 ! n  D' ]7 B' Gthe standard two-story home to 73.7 per cent.
 3 j7 t7 A; J5 k2 m/ U    According to the report, there are signs that the B.C. housing markets
 6 s: ^7 Z! v* `$ U8 {8 p- b: Z- ymay be stabilizing as sales of existing homes appear to have bottomed out in  h: X! s/ D! Q  f/ ?
 the closing months of 2008 and the first two in 2009 - although at  U' @  [0 A, E
 historically depressed levels.
 . T9 r$ {) c# G) j4 U( E  ~    Despite sharply declining house prices and lower mortgage rates, the cost9 F4 Y9 I, w) y6 U" r
 of homeownership in Vancouver is still the highest in the country. House5 ^; `  @, u# d' p
 prices continue to rapidly decline and pricing power remains firmly in the  U9 u( o) }2 ?0 H; u
 hands of buyers with the sales-to-new listings ratio at historical lows. "This0 n- k% [4 t9 I( L: |. }
 enormous imbalance suggests that prices will likely further correct in the
 . q# `+ u& W- Q8 a  zmonths ahead," added Hogue.8 }/ f  j4 u7 r9 t' G9 ^  {5 i
 RBC's Affordability measure for a detached bungalow for Canada's largest
 8 j$ W1 w# l" Z8 q; ?cities is as follows: Vancouver 70.3 per cent, Toronto 51.3 per cent, Calgary  a/ T  j9 H) A4 q. M; `! Z% ]
 42.7 per cent, Ottawa 42.7 and Montreal 39.4 per cent.6 K0 W. {6 N9 p" Z, \
 The report also looked at mortgage carrying costs relative to incomes for
 % l- ^1 F9 w9 ca broader sampling of cities across the country, including Victoria. For these
 7 v& Z0 M; _2 E0 Hcities, RBC has used a narrower measure of housing affordability that only
 5 P7 P+ O6 o" D6 z1 q; f4 |2 Ptakes mortgage payments relative to income into account.
 3 p. d/ B" Y( g6 L# J+ f, O    The Housing Affordability measure, which RBC has compiled since 1985, is
 # X* a' `0 I* cbased on the costs of owning a detached bungalow, a reasonable property1 O9 H" X0 P) b# T
 benchmark for the housing market. Alternative housing types are also presented
 0 ]& {2 g7 P  }including a standard two-storey home, a standard townhouse and a standard) \/ J4 a: S$ \: O& k5 `& J
 condominium. The higher the reading, the more costly it is to afford a home.6 i  k- `; {/ o$ b! S/ Z
 For example, an Affordability reading of 50 per cent means that homeownership' ^4 _$ f- o/ M7 z4 i! M& i# F0 E' }
 costs, including mortgage payments, utilities and property taxes, take up 508 r( H0 f# L+ v. K9 ~9 }1 M; I- `# [
 per cent of a typical household's monthly pre-tax income.
 $ ?7 V& d+ n. d" K1 N, \5 c/ Y9 u. I7 ^/ s
 <<* R( ^. I3 F% F% N" ]) O3 d) s
 Highlights from across Canada:
 0 c7 R* P2 a1 M0 G6 A0 v; |! ?. L' b8 u0 v
 -   Alberta: Since last fall, the declining Alberta economy has
 6 E8 @9 N) u  x: ~! N$ }0 \! z5 q& E        intensified the downdraft on the province's housing markets, causing
 0 u; n+ b# K' P; R8 {6 T7 `4 n        home resales to drop to a 12-year low at the end of 2008 and rebound4 W: T9 n5 k8 S$ a6 D1 y" r$ o3 d
 only modestly since. Affordability has been on an improving track
 * p1 Q2 O9 m: j5 A+ c. |        since about the middle of 2007.5 k( N  {1 h/ T) _/ M
 -   Saskatchewan: Market activity has cooled considerably from the$ N+ ~4 [' {5 Z7 X1 a) S: B9 m, p
 frenzied pace from 2006 to early 2008 and prices have begun to5 H4 p" O/ a) C, I. I- [4 T
 decline. Nonetheless, economic and demographic fundamentals are still
 2 Z" N( @+ ^$ s$ b) p) e6 a        largely supportive of the housing market and overshadow extremely# E. p: ]5 E2 U- b8 q. L* e
 poor affordability levels.
 0 k$ w4 b; k. p/ u    -   Manitoba: Manitoba's housing markets have fared much better than the+ V& b* \1 X' y3 r* l
 vast majority in Canada: resale activity has slowed moderately and+ U6 o/ T5 d+ J3 _9 \
 prices have either held their own or edged down just slightly.
 M1 d) P. {0 W% {  Q8 B6 W- E        Affordability has been kept out of the danger zone, helping to  ?& @, ~! q" A2 S
 minimize any downside risks.
 2 n3 m; [1 [- w    -   Ontario: With the recession pounding many communities, housing market3 q; Y1 W6 i& ?
 conditions have deteriorated considerably. However, the impact is
 & [+ o4 r* V! z0 c" _/ c        unlikely to develop into an all-out rout similar to that of the early
 . t) \- ^, G* g# ~        1990s. Affordability, while still causing some stress, is quickly$ ?, a4 M& J" U: R
 being restored to levels closer to long-term averages.9 h' I6 m$ z, o/ p( H" W0 ~1 Q
 -   Quebec: The province's housing markets have been among the last in
 & f" s) q+ Z9 X, o4 T        Canada to yield to the weakening trend. The main sign of cooling thus8 Z  c7 \! D3 K: r
 far has been a drop in resale activity, as prices have held up
 1 }7 V. e9 h: J, E' o* H1 E        reasonably well. Some of the persisting market strength can be7 ]. _8 |! u1 i/ q/ h
 ascribed to sensible affordability levels, which had eroded only7 Z9 R7 C3 R1 y& n( W
 modestly in recent years.  V0 U2 y) A6 l$ f* a1 c
 -   Atlantic region: Markets have largely remained stable against the/ D+ k$ u/ G2 P- Z
 general housing downturn, with St. John's becoming the housing hot* ?% C- n# p+ \+ ], B
 spot in Canada and Halifax and Saint John maintaining steady upward
 . g7 L. A# l+ X/ p8 M0 b0 R        price momentum. The region is benefiting from improving affordability4 e  ]+ Y0 k+ M8 U1 Q
 following two years of deterioration., V  E2 Y- t1 W+ s
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