A new study by RBC Economics finds that housing affordability improved across Canada during the first three months of the year, with weaker home prices and lower borrowing costs substantially reducing costs in many markets.
On average, the cost to own a typical bungalow across Canada fell by 17 per cent, to $1,350 a month compared to $1,650 a month during the first quarter of last year.
RBC's affordability index looks at the percentage of pre-tax household income used to pay mortgage, utilities and property taxes. The Canadian average was 39.4 per cent, though you probably paid waaaay more than that if you lived in Vancouver, where the average household spends nearly 63 per cent of pre-tax income covering housing costs.
There would be revolution in the streets of Montreal if housing costs ever gobbled up anywhere near that percentage of income on anything as stodgy as a roof overhead.
In a city where renters still make up a bigger percentage of the population than in any other large Canadian city, people put a premium on living well with their money, even if it means settling for a smaller, possibly shabbier apartment. Don't believe me? Just peek through the window of any reasonably good resto on St. Denis St. on any Monday, Tuesday or Wednesday night. We like to eat out, and wash a good meal down with a good bottle of wine. Not once a week or once a month, as often as possible. Good food, nice clothes (your humble blogger excepted) and travel, these are the things Montrealers like to spend their money on.
The good news? It remains more affordable to buy and maintain a home in Montreal than in almost any city in Canada.
In Toronto, housing costs eat up nearly 46 per cent of household income, in Ottawa, it was just over 39 per cent. The two large cities that had costs lower than Montreal were Calgary (35 per cent) and Edmonton (34 per cent).
The RBC report found that Quebec housing markets fared better during the downturn than other parts of the country. Prices dipped a little during the last few months of 2008 but rebounded quickly in the spring.
"During this blip of a few months, prices barely missed a beat, generally staying their upward course (albeit at a slower pace.)" according to RBC's economists.
There was a common theme with the first-time buyers I worked with during the first half of the year. They all seemed to think the housing market was in freefall and that they would be able to pick up a house at a steep discount.
They were half right. Prices did not fall in Montreal. They held steady or rose slightly compared to last year. Where the discounts came was in borrowing costs, which fell steeply. That's what made this spring a good time to house hunt.