- Front Page
September 26, 2012
CALGARY, AB, Sep 26, 2012/ Troy Media/ – Home sales have been in free fall in some major Canadian markets, triggering anxiety that prices might soon follow. The correction is being blamed on changes to mortgage insurance (MI) rules. Although those rules apply nationally, Alberta remains in good shape.
Alberta is certainly no stranger to real estate exuberance. But, in many ways, the province has managed to pull off what analysts everywhere hope for: a soft landing. Compared to other places in Canada, the run-up in prices before the recession was far more dramatic, but the surge in prices post-recession was nearly non-existent after the initial drop, greatly improving affordability as wages kept rising and interest rates dropped like a rock.
Between June 2008 and June 2012, average industrial wages have increased by about $143/week in Alberta compared to about $87/week nationally. This has helped make Alberta a relatively affordable place to live. As of August 2012 the ratio of monthly wage income to pay the average residential mortgage payment was 39 per cent in Alberta, compared to 58 per cent in British Columbia and 47 per cent in Ontario.
In fact, due to lower taxes and more non-standard pay structures (such as bonuses), it’s likely that home affordability in Alberta is even more favourable relative to Canada’s other large provinces than the above ratio would suggest.
At the end of the day the changes to MI rules are equivalent to having the limit on your credit card reduced. If your business is selling largely to individuals who could pay only because of generous financing terms, then you’re in more trouble than the merchant selling to individuals who needed those terms less.
| ATB Financial
This column is FREE to use on your websites or in your publications. However, Troy Media, with a link to its web site, MUST be credited.
© Troy Media