The latest eye-popping numbers from the Toronto and Vancouver real estate boards have once again raised the spectre of an affordability crisis.
National averages can be deceiving especially in light of the stratospheric prices in the country’s two hottest markets. But popular measures of affordability can also be misleading because of their narrow terms of reference.
The Residential Construction Council of Ontario, which represents home builders, released a report that points to wider economic issues that affect affordability.
It uses a broader metric that includes the full cost of “using” a home against net income, after paying for other essentials. Nationally, this measure shows housing uses 38.5% of income that remains after essentials are covered.
Troubling though is the picture the report paints for millennials, aka first-time buyers. It indicates 26% of Ontario households are using more than 60% of their “after essentials” income for housing. Of that group 60% are under age 45.
By another measure, every dollar in net housing wealth accrued by young adults cost them $1.35 in additional mortgage debt.
See here: www.gensqueeze.ca/secret_study
This market commentary is provided by First National Financial LP, a MonsterMortgage.ca partner.
This commentary may reflect opinions that may or may not reflect those of MonsterMortgage.ca. First National Financial Corporation is a Canada-based originator, underwriter and servicer of prime residential (single-family and multi-unit) and commercial mortgages.BACK TO BLOG FEED