RBC Calgary Housing Affordability Report – Examined

The RBC Calgary housing affordability report has been released and it contains many promising indicators for home owners and new home purchasers in Calgary.  This report is also complemented by many grass roots indicators that I have been seeing with my personal real estate portfolio in addition to my real estate investor clients:

• We have recently filled vacancies and renewed leases in other properties. The vacancies were filled immediately with multiple qualified applications to choose from and the leases were renewed with a (in my opinion) long overdue rental increases.
• Many of my real estate investor clients have toned down their acquisitions from their peak in 2007 – 2008.  Their activity has also started to increase as their optimism coupled with market fundamentals has strengthened.

So, from a grass roots level we have decreased vacancy and increased investor confidence – let see what the RBC report has to say….

 The RBC Calgary Housing Affordability Report:

On page five RBC specifically highlights the real estate market in Calgary,  noting that the housing affordability in Calgary is the best it has been in over 6 years!

Q. What is this housing affordability number?

A. This number is a % of home ownership costs as compared to household income.  When we are approving our clients’ mortgages we use a similar number called your total debt service which qualifies clients for their mortgage approval provided their monthly payments from their home and personal credit do not exceed 42% of their income.

Q. Why does it matter?

A.  This number is Critical to understanding the health of the housing market.  A healthy market will generally reflect a total debt ratio number of between 35% and 42%.  We are currently sitting in a sweet spot at 38%.  To illustrate this, you will notice the side bar graph on the report that shows the pre-boom numbers fluctuating in the mid 30% range and the peak of the boom in 2008- 2009 reflecting a number in the low 50% range.

This is awesome news and information to share with your friends and family and also bodes very well for excellent real estate market growth.  Reading between the lines, this information coupled with the continued Alberta economic growth could foreshadow an extremely promising 2012 and 2013 for the Calgary real estate market!

http://www.rbc.com/economics/market/pdf/house.pdf .

You can read more about the RBC Calgary housing affordability report here at the above link, have an awesome day!