TORONTO - Softening home prices drew Canadians back into the housing market in a big way in the first quarter, according to a Royal Bank (TSX:RY) report.
RBC Economics says home affordability recorded some of the biggest quarterly improvements on record in the first quarter.
Senior economist Robert Hogue says with market turmoil decreasing and credit flows increasing, resale activity has "rallied impressively."
He says what is most impressive is how widespread this rebound has been, "with all major cities in Canada experiencing a revival."
Declining costs of home ownership during the last year were driven by significant cuts in mortgage rates.
In the first quarter, says RBC, monthly payments on a typical detached bungalow fell by close to 17 per cent from a year earlier.
RBC says the proportion of pre-tax household income needed to own a home improved across all housing segments.
It says the benchmark detached bungalow moved to 39.4 per cent, the standard townhouse to 31.9 per cent, the standard condo to 27.1 per cent and the standard two-storey home to 44.7 per cent respectively.
RBC's affordability measure for detached bungalows in the largest cities were 62.6 per cent in Vancouver, 45.9 per cent in Toronto, 39.1 per cent in Ottawa, 36.5 per cent in Montreal and 35.1 pr cent in Calgary.
"Housing markets generally appear to be on the mend in Canada but the road to full recovery still has obstacles," added Hogue.
He added that further improvement in affordability will depend on greater gains in family income.
