The Bank of Canada’s (BoC) Housing Affordability Index (HAI) for the second quarter this year revealed that the cost of purchasing a home decreased from 2017, according to a report by Better Dwelling.
The HAI estimates the income required for housing and makes use of a household’s disposable income for the figures. Costs covered are mortgage payments and utilities. At times, taxes, maintenance, and insurance (TMI) add to the total number.
According to the latest report, the amount of disposable income required is still high but is tracking lower. Homeowners need 34.8% of their income to afford homes, marking a 1.97% and 0.57% drop from the previous quarter and the past year, respectively.
However, Better Dwelling warned that the downward trend is not likely to continue into the third quarter due to rising prices and mortgage rates that took effect before BoC’s study was made. This was supported by the data from The Federal Reserve Bank of Dallas, stating that prices rose in the most recent quarter.