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Housing-crash prophets should check their numbers again

Posted on 15 February 2013

Some people are predicting a crash in the Canadian housing market because price-to-income and price-to-rent ratios have gone up a lot. But these ratios omit mortgage rates, a key determinant of prices. A better guide, in my view, is the housing affordability index published by Royal Bank of Canada (RBC).
RBC’s measures at the national, provincial, and city levels show the proportion of median household income required for mortgage payments, property taxes and utilities on various types of houses at going market prices. By including mortgage rates (and other costs), they offer “a much more realistic measure of the ability of households to afford housing than the crude price-to-income ratio ….,” says Wikipedia………………………………………..Full Article: Source


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Laxman - who has written 28515 posts on Opalesque Real Estate Briefing.


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