Post 16 of 30, Affordability vs Availability

Good morning,

The state of our local Real estate market always comes down to two things- Affordability and Availability.

Affordability is all about demand….Who wants it? What can they afford? And what will they pay.

Availability is all about supply…. How much is available? What does it cost? What will they sell for?

If, over time more listings are selling, you are in a Sellers market…if less listings are selling you are in a Buyers market. Our job as Realtors is to pay attention to the trajectory of our local market, so that we can see ahead of everyone else when the market starts to shift. This will allow you to advise your Buyers and Sellers accordingly, and change our marketing message to fit the shifting market.

The 7 factors that affect Affordability and Availability are
1. Inflation
2. Interest rates
3. Population
4. Employment
5. Household income
6. Neighbourhood dynamic
7. Home prices

Lets take a look at the current affordability for Canadians.


Year 1989 2010 2011YTD

Bread $0.67 $2.22 $2.66

Milk $0.59 $2.25 $2.32

Gas/liter $0.49 $1.01 $1.33

Avg. Home Price $141,985 $339,030 $371,286

Mortgage Rate(posted) 13.35% 5.61% 5.34%

Monthly payment $1,554 $1,831 $1,941

According to the latest press release form RBC, housing affordabilty is eroding slightly in our market place. See the excerpt below with respect to Toronto.
“The RBC Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes and
utilities on a detached bungalow, a standard two-storey home and a standard condo (excluding maintenance fees) at the going market price.”

RBC Housing Measure Average since 1985 vs Current
Detached 2-storey 54.4 61.4
detached bungalow 48.9 51.9
Condo 31.6 34.2

So…what does this mean for you? Affordability is eroding in our market place, but it is still relatively sustainable and nowhere close to the crazy levels in 1990. Having said that, you should start paying closer attention to the 7 factors that affect affordability. any large movement in any of those factors will be the beggining of a shift in the Toronto Real Estate Market.

I hope this helps,


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About Glenn McQueenie

Glenn is the Operating Principal of Keller Williams Referred Realty and Broker of Record of Keller Williams Referred Urban Realty in Toronto. His first office was launched in 2004 and has now grown to over 230 agents in 2 offices. Glenn's passion is teaching, coaching and mentoring agents to help them get more referrals from their Sphere of Influence, converting more leads and getting additional transactions from every listing you take. Glenn is also committed to helping people have careers worth having, business worth owning and lives worth living.
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