Canada’s largest bank believes real estate affordability will continue to deteriorate. RBC Economicsupdated their Affordability Index for Q3 2018. The index, which shows how much a household would pay for a mortgage, printed one of the worst levels in history. Analysts from the bank expect affordability to get worse in 2019, as interest rates rise. However, they did mention the decline in affordability will be mitigated by falling prices.

RBC Affordability Index

The RBC Affordability Index is one of the many indexes that compare how much it costs to own a home. The index presents the ratio of income median households need to use to buy a house today. They use a five year fixed rate, assuming a 25 year amortization, and a 25% down payment. There’s a few notes you should also remember that help us understand why this data is useful.

A lot of people look at this number and think, “OMG – Canadians are paying how much of their income?!” No, the vast majority of Canadians bought before the spike in prices. This means the lion’s share of households are minimally impacted by a rise in servicing costs. Heck, most banks wouldn’t lend someone the money if they needed to spend more than 50% of their income on debt service.

Instead, the takeaway is in regards to liquidity. The higher the servicing costs, the smaller the pool of qualified buyers. Illiquid assets tend to experience wild swings in prices, not all positive. This is actually pretty obvious if you look at the index. The peaks aren’t elevated for more than 3 years, without a correction and recession.

Canadian Real Estate Is The Least Affordable Since 1990

The affordability index for Canadian real estate held its level for a second quarter. A median household in Canada needed 53.9% of their income in Q3 2018, the same as the previous quarter. That number represents a 3.05% increase compared to the same quarter last year. While high, we’re still under the peak level of unaffordability established in Q2 1990.

Canadian Real Estate Affordability (RBC Index)

The percent of income required by a median household to service mortgage debt on a conventional mortgage across Canada.

Quarter	Aggregate	Detached	Condo	Recession
1985 Q1	41.5	42.4	33.2
1985 Q2	39.3	40.3	31.5
1985 Q3	38.3	39.2	30.8
1985 Q4	38.2	39.1	30.9
1986 Q1	38.5	39.4	31.1
1986 Q2	36.7	37.6	30
1986 Q3	37.9	38.9	30.8
1986 Q4	38.7	39.7	31.5
1987 Q1	37.5	38.5	30.9
1987 Q2	40.7	41.8	33.9
1987 Q3	42.6	43.7	35.6
1987 Q4	42.8	44	36
1988 Q1	42.3	43.5	35.8
1988 Q2	42.5	43.6	36.3
1988 Q3	45.1	46.4	38.3
1988 Q4	45.7	47.1	39
1989 Q1	46.9	48.3	40.5
1989 Q2	47.5	49	40.9
1989 Q3	45.7	47.1	39.9
1989 Q4	46.8	48.3	40.8
1990 Q1	50.3	51.9	44.6
1990 Q2	56	57.9	49.8
1990 Q3	52.6	54.3	46.5
1990 Q4	50.1	51.8	43.9
1991 Q1	45.6	47.3	39.1	70
1991 Q2	45	46.7	38.7	70
1991 Q3	45.9	47.7	39.4	70
1991 Q4	43.2	44.9	37.1	70
1992 Q1	42.4	44.3	36.4
1992 Q2	42.3	44.2	36.4
1992 Q3	39	40.8	33.3
1992 Q4	41.3	43.2	35.2
1993 Q1	41.3	43.3	35.3
1993 Q2	40.8	42.8	34.7
1993 Q3	40.3	42.3	34.3
1993 Q4	38.4	40.5	32.4
1994 Q1	37.8	39.9	31.7
1994 Q2	43.6	45.9	36.5
1994 Q3	44.7	47.1	37.1
1994 Q4	43.9	46.4	36.5
1995 Q1	44	46.4	36.5
1995 Q2	39.8	42.1	32.9
1995 Q3	39.2	41.5	32.1
1995 Q4	38.7	41	31.6
1996 Q1	37.4	39.6	30.4
1996 Q2	38.5	40.9	31.2
1996 Q3	37.6	39.9	30.5
1996 Q4	34.9	37.2	28.2
1997 Q1	35.4	37.7	28.6
1997 Q2	36.1	38.4	29.2
1997 Q3	35.5	37.7	28.5
1997 Q4	35.1	37.4	28.3
1998 Q1	35	37.3	28.3
1998 Q2	34.9	37.2	28.1
1998 Q3	35.4	37.7	28.5
1998 Q4	34.6	36.9	27.9
1999 Q1	34.7	36.9	27.9
1999 Q2	35.1	37.4	28.3
1999 Q3	36.2	38.6	28.8
1999 Q4	37.5	39.9	29.8
2000 Q1	38.5	41	31
2000 Q2	38.4	40.8	30.5
2000 Q3	37.8	40.2	30.3
2000 Q4	37.7	40.1	29.8
2001 Q1	36.4	38.7	29
2001 Q2	36.4	38.6	29
2001 Q3	36.2	38.4	29
2001 Q4	35	37.4	27.9
2002 Q1	36.3	38.7	29.2
2002 Q2	37.1	39.6	29.9
2002 Q3	36	38.5	29
2002 Q4	36.4	38.9	29.3
2003 Q1	36.5	39	29.9
2003 Q2	36	38.6	29.4
2003 Q3	36.8	39.4	30
2003 Q4	37.7	40.5	30.8
2004 Q1	36.5	39.2	29.9
2004 Q2	38.6	41.5	31.7
2004 Q3	38.9	41.8	32.1
2004 Q4	38.6	41.5	32
2005 Q1	38.6	41.6	32
2005 Q2	38.4	41.3	31.8
2005 Q3	38.8	41.6	31.9
2005 Q4	40.2	43.2	32.9
2006 Q1	41.2	44.3	33.5
2006 Q2	42.8	46	34.9
2006 Q3	43.9	47.4	35.7
2006 Q4	43.8	47.3	35.6
2007 Q1	43.8	47.3	35.6
2007 Q2	45.4	49	36.9
2007 Q3	47.3	51.1	38.6
2007 Q4	48.8	52.7	40.1
2008 Q1	48.3	52.1	39.7
2008 Q2	46.5	50.2	38.1
2008 Q3	46.4	50	38
2008 Q4	47.2	50.8	38.7
2009 Q1	42.3	45.6	34.8	70
2009 Q2	41	44.1	33.6	70
2009 Q3	42.6	45.9	35	70
2009 Q4	43.4	46.8	35.8	70
2010 Q1	43.9	47.4	36.1
2010 Q2	46.1	49.9	37.7
2010 Q3	44.6	48.4	36.2
2010 Q4	43.8	47.6	35.4
2011 Q1	43.9	47.7	35.4
2011 Q2	44.9	48.8	36.1
2011 Q3	44.7	48.6	35.7
2011 Q4	44.2	48.1	35.2
2012 Q1	43.6	47.4	34.7
2012 Q2	43.6	47.3	34.5
2012 Q3	43.8	47.6	34.4
2012 Q4	43.6	47.6	34.2
2013 Q1	43.3	47.2	33.9
2013 Q2	43.2	47.2	33.8
2013 Q3	44.2	48.2	34.5
2013 Q4	44.5	48.6	34.6
2014 Q1	43.5	47.6	33.7
2014 Q2	41.9	45.8	32.3
2014 Q3	42.4	46.2	32.6
2014 Q4	43	46.9	33
2015 Q1	43.3	47.3	33.1
2015 Q2	43.2	47.2	32.8
2015 Q3	43.8	48	33.1
2015 Q4	44.7	49	33.6
2016 Q1	45.6	50.2	34
2016 Q2	46.8	51.6	34.4	Steven Axford Steve Axford grew up in Victoria, BC and has always been active in his community. Steve is a Victoria Cougars Hockey Team alumni as well as a Victoria Shamrocks (intermediate) alumni. During his time.... Login To Leave A Comment Latest Blog Posts Experts Say Home Prices Will Continue to Appreciate!! Posted by Steven Axford May 11 2021 0 comments It’s clear that consumers are concerned about how quickly home values are rising. Many people fear the speed of appreciation may lead to a crash in prices later this year. In fact, Google  Read More 3 Graphs Showing Why You Should Sell Your House Today Posted by Steven Axford May 10 2021 0 comments There’s no doubt that 2021 is the year of the seller when it comes to the housing market. If you’re a homeowner thinking of moving to better suit your changing needs, now is Read More Big Incentives for Homeowners to Sell Now! Posted by Steven Axford May 4 2021 0 comments 4 Big Incentives for Homeowners to Sell Now1.4KSHARES1.1K12913159The housing market keeps sailing along. The only headwind that could take it off course is the lack of inventory for sale. The  Read More Housing in Greater Victoria remains in high demand Posted by Steven Axford May 3 2021 0 comments  "Comparing last year’s April market to 2021 does not provide us any real insight into long term market trends,” said Victoria Real Estate Board President David Langlois. &ldquo Read More Property Search Location Types Single Family Condos Commercial Land Townhouse Pending Multi-Family Style Arts & Crafts California Character Condo Apartment Contemporary Contemporary,West Coast Half Duplex Row/Townhouse Single Family Detached West Coast Beds Any 1+ 2+ 3+ 4+ 5+ 6+ Baths Any 1+ 1.5+ 2+ 2.5+ 3+ 4+ 5+ 6+ Min Min $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 $550,000 $600,000 $650,000 $700,000 $750,000 $800,000 $850,000 $900,000 $950,000 $1,000,000 $1,050,000 $1,100,000 $1,150,000 $1,200,000 $1,250,000 $1,300,000 $1,350,000 $1,400,000 $1,450,000 $1,500,000 $1,550,000 $1,600,000 $1,650,000 $1,700,000 $1,750,000 $1,800,000 $1,850,000 $1,900,000 $1,950,000 $2,000,000 $5,000,000 $10,000,000 Max Max $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 $550,000 $600,000 $650,000 $700,000 $750,000 $800,000 $850,000 $900,000 $950,000 $1,000,000 $1,050,000 $1,100,000 $1,150,000 $1,200,000 $1,250,000 $1,300,000 $1,350,000 $1,400,000 $1,450,000 $1,500,000 $1,550,000 $1,600,000 $1,650,000 $1,700,000 $1,750,000 $1,800,000 $1,850,000 $1,900,000 $1,950,000 $2,000,000 $5,000,000 $10,000,000 $15,000,000 Min Sqr ft 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 8,000 8,500 9,000 9,500 Min Acres Year Built Any 1900+ 1905+ 1910+ 1915+ 1920+ 1925+ 1930+ 1935+ 1940+ 1945+ 1950+ 1955+ 1960+ 1965+ 1970+ 1975+ 1980+ 1985+ 1990+ 1995+ 2000+ 2005+ 2010+ 2015+ Any Year Max Year Built 2021 1900 1905 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Walkscore Any Somewhat Walkable Very Walkable Walkers Paradise Options Just Listed Walkable Fixer Upper Newly Built Open House Adult 55+ Green/Energy Star Horse Property Golf Course Pool Water Front Water View Views Foreclosures Shortsales Not Distressed Lease to Own No Strata Fees Seller Financing Fireplace 1+ Garage 2+ Garage 3+ Garage 1 Story 2 Stories 3+ Stories Deck Basement Master on Main Air Conditioning Furnished Allows Pets Accessibility Features Accessible Entrance Ground Level Main Floor No Step Entrance Primary Bedroom on Main Wheelchair Friendly Basement Y/N 0 1 Cooling Air Conditioning Central Air HVAC None Other Partial Wall Unit(s) Window Unit(s) Lot Size Dimensions 100 ft wide 100 ft wide x 122 ft deep 100 ft wide x 280 ft deep 100x100' 106 ft wide x 154 ft deep 108 ft wide x 69 ft deep 111 ft wide x 130 ft deep 118 ft wide x 186 ft deep 119 ft wide x 174 ft deep 120 ft deep 120 ft wide x 85 ft deep 120 ft wide x 90 ft deep 132 ft wide x 195 ft deep 134.4 x 124.4 147 ft wide 150 ft wide 150 ft wide x 75 ft deep 165 ft wide 166x629 167x84 173'x95' 18x20 240 ft wide x 566 ft deep 25x115 26 ft wide x 254 ft deep 27 ft wide x 196 ft deep 270 ft wide x 644 ft deep 28 ft wide x 120 ft deep 284 ft wide 29X80 30 ft wide x 100 ft deep 30 ft wide x 133 ft deep 30 ft wide x 137 ft deep 30 ft wide x 90 ft deep 30 x 120 34 ft wide x 91 ft deep 36 ft wide x 94 ft deep 38 ft wide x 50 ft deep 40 ft wide 40 ft wide x 165 ft deep 40 ft wide x 94 ft deep 40x180 46 ft wide x 131 ft deep 460 ft deep 48 ft wide x 103 ft deep 48 ft wide x 120 ft deep 50 ft wide 50 ft wide x 110 ft deep 50 ft wide x 112 ft deep 50 ft wide x 113 ft deep 50 ft wide x 117 ft deep 50 ft wide x 120 ft deep 50 ft wide x 123 ft deep 50 ft wide x 125 ft deep 50 ft wide x 129 ft deep 50 x 113 50 x 120 50 x 164 50X113 50x144 51 ft wide x 120 ft deep 51 ft wide x 127 ft deep 51 x 112 52 ft wide x 115 ft deep 52 ft wide x 120 ft deep 52.1 x 206.7 55 ft wide x 100 ft deep 55 ft wide x 135 ft deep 55 x 128 56 ft wide x 133 ft deep 56 ft wide x 210 ft deep 56.4 X 106 57 ft wide x 130 ft deep 60 ft W x 105 ft L 60 ft wide 60 ft wide x 100 ft deep 60 ft wide x 104 ft deep 60 ft wide x 107 ft deep 60 ft wide x 110 ft deep 60 ft wide x 120 ft deep 60 ft wide x 135 ft deep 60 ft wide x 165 ft deep 60 ft wide x 66 ft deep 60 ft wide x 92 ft deep 60 x 120 60 x 158.6 Ft 60x111 61 ft wide x 140 ft deep 62 ft wide x 110 ft deep 62 ft wide x 136 ft deep 63 ft wide x 140 ft deep 63'x326' 64 ft wide x 115 ft deep 64 ft wide x 199 ft deep 65 ft wide x 120 ft deep 65 ft wide x 129 ft deep 65 ft wide x 136 ft deep 65 ft wide x 164 ft deep 65.5 x 71 approx. 66 ft wide 66 ft wide x 120 ft deep 66 ft wide x 132 ft deep 66 ft wide x 233 ft deep 67 ft wide x 120 ft deep 67.1 ft wide x 151 ft deep 69 ft wide x 120 ft deep 70 ft wide 70 ft wide x 154 ft deep 70 ft wide x 194 ft deep 70 ft wide x 97 ft deep 70x150 72x135 75 ft wide x 140 ft deep 75 ft wide x 150 ft deep 75 ft wide x 151 ft deep 75 ft wide x 157 ft deep 78 ft wide x 105 ft deep 80 ft wide x 112 ft deep 80 x 230 83 ft wide x 107 ft deep 86 ft wide x 133 ft deep 860 ft deep 86x101 90 ft wide x 120 ft deep 90x100 97x197 98 ft wide x 194.8 ft deep IRREG. irregular Number of Garage Spaces 0 1 2 3 4 5 6 Pets Allowed Y/N Aquariums Birds Caged Mammals Cats Dogs None Number Limit Size Limit Yes Sewer Holding Tank None Other Perc Test on File Septic Needed Septic System Septic System: Common Sewer Available Sewer Connected Sewer To Lot Tile Field Total Kitchens 0 1 2 3 4 View City Lake Mountain(s) Ocean Other River Valley Water Waterfront 0 1 Keywords Search Contact Information Phone: 250-858-8947 Search Blog Search Term Search Our Bloggers Steven Axford Posts Steven Axford 176 Posts eXp Realty - Victoria (BC) 250-858-8947 1321 Blanshard St Victoria, BC Should you require assistance in navigating our website or searching for real estate, please contact our offices at 250-858-8947. Steven Axford 1-250-858-8947 eXp Realty 1321 Blanshard Street Suite 301, Victoria, BC V8Z 1J9 MLS® Disclaimer Data provided by: Victoria Real Estate Board 3035 Nanaimo Street, Victoria, British Columbia V8T 4W2 All information displayed is believed to be accurate but is not guaranteed and should be independently verified. No warranties or representations are made of any kind. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by CREA and identify the quality of services provided by real estate professionals who are members of CREA. Used under license. 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