The State of Non-Affordability in Canada’s Hottest Housing Markets

The comments below are an edited and abridged synopsis of an article by DerailedCapitalism

Canadian banks, real estate agents and mortgage lenders are all celebrating the so-called soft landing in the nation’s housing market. They point to how prices are gradually ‘normalizing’ and, thanks to a decline in mortgage rates, how homeownership is now more affordable. But that’s far from the truth.

The State of Non-Affordability in Canada’s Hottest Housing Markets | BullionBuzz
House model and key in home insurance broker agent hand or in salesman person. Real estate agent offer house, property insurance and security, affordable housing concepts

In the last few months, if you’ve put your home up for sale in one of Canada’s hot housing markets, like Ottawa, Toronto or Vancouver, then you’re likely breaking out the champagne and celebrating.  However, what’s good for the goose (sellers) is not necessarily good for the gander (buyers).

While home prices have recovered somewhat, the rising cost of living, ever-increasing household debt and growing employment uncertainty (Canada lost 1.8k jobs in October) is adding to a housing affordability crisis that mortgage lenders and home loan financiers aren’t talking to their clients about. And given that home prices are growing faster in many markets (Ottawa) than median incomes, ‘bubble’ isn’t a word that’s out of place. Clearly, if that bubble were to burst, what’s not so good for the gander might also not be too good for the goose. Prospective homebuyers must heed the signs and plan their homebuying accordingly.

The author discusses some startling figures (what goes up must come down), and how the Ottawa and Toronto housing markets are similar.

For Canadians, there’s more to worry about than house prices in Ottawa or Toronto. A Bloomberg analysis indicates that the nation’s housing market is indeed in bubble territory. And if that bubble bursts, as it must to correct itself, not only will buyers pay the price, but prospective sellers might also get the short end of the proverbial stick.

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