A report focusing on the Canadian housing market conditions of 2008 and the 1st half of 2009 was recently brought by The Canada Mortgage and Housing Corporation. It is focused mainly on the housing starts and the issue of affordability to rent and own.

The housing market in Canada is now slowly getting better from the last year's shock, as it follows from the report. While new home market actual starts decreased from January to June 2009 by over 43 per-cent compared to the same period in 2008, the MLS sales increased by over 17 per-cent in comparison to the July 2008 figures.

The new housing price index is rising, just as the general housing market volumes. The average price change in Canada has been from -0.6% (January) to -0.1% (May). The new housing price in Toronto has changed only slightly over zero values, in accordance with the improvement of the resale market.

Economic conditions: Unemployment

We can be fairly optimistic now in regard to our economy. First of all, the growth of unemployment seems to be finally under control with only 13,000 net losses in July compared to the whooping 273,000 decline in the first quarter of 2009. Secondly, according to the Bank of Canada, the various stimulus packages introduced by many countries in the last year are slowly showing out some effect.

Affordability to rent

When we want to calculate the affordability to rent, we need to know how many hours in a month people have to work in order to earn the average price of a 2-bedroom apartment rent or the average mortgage payment down to 30% of gross monthly salary. (The hourly wages in Canada in 2008 were growing by over 5 per-cent to $23.69 (Ontario: $24.65, Toronto: $24.93)).

Generally, the average number of working hours required to earn the average rent for a 2-bedroom apartment down to 30% has declined from 114 to 113 hours per month. The biggest decline has been observed in St John's, Brantford and Guelph, while in Toronto the number of hours declined from 149 to 146, meaning that Toronto ended up as the second most expensive city in this "competition", just after Vancouver.

Affordability of home owner-ship

Whereas the number of hours necessary to rent didn't decline so significantly, the same number for average mortgage payments down to 30% of gross income was more perceivable - between 2007 and 2008 it decreased from 255 to 240 hours. One of the places where the number of hours necessary to own declined the most, was Toronto: from 299 to 286. But even so, Toronto still holds the 4th position among the most expensive cities regarding owning an apartment, just after Vancouver, Victoria and Abbotsford.

Conclusion

As the whole housing market is recovering from the fall in the second half of 2008, also new housing is becoming a bit more affordable, which is news I really like to bring to my clients, being a real estate agent from Toronto. In the first six months of 2009, the prices were slightly declining and the affordability of renting and also home ownership was getting more favorable. As the interest rates are still staying quite low, it is now a great time for buying a property, before the market takes a second breath.