October 28, 2009

Affordability declines in Canada in Q3

Price increases are to blame
The Desjardins Affordability Index (DAI) deteriorated sharply Canada
Canada-wide in the third quarter of 2009. After making a short
Index Index
incursion into affordable territory, the DAI has dipped below
160 160
its historic average, returning to where it was when the
150 150
recession began. The improved economic outlook and low
mortgage rates have fuelled a strong comeback by buyers. 140
126.5
140

The number of sales has taken back all of the ground lost 130 130
Average
during the recession, driving prices higher in Q3. Average
120 120
property prices even hit a new peak of $328,762, up 7.1% from
T rend DAI
the previous quarter. The drawback of this surge is that it 110 110

makes the housing market less affordable, which could cool 100 100

buyers’ enthusiasm. 90 90
1988 1991 1994 1997 2000 2003 2006 2009

The nascent economic recovery in Ontario has driven up Source: Desjardins, Economic Studies

demand for homes. The average home price hit an unmatched
peak in the third quarter ($324,873) thanks to sharp growth in
Toronto. Affordability thus deteriorated in the province, going
to its historic average (130.6 points). The crisis has still left its
mark; Ontarians’ average disposable income has fallen
substantially, going from $79,299 a year ago to $77,601 in the
third quarter of 2009.
After seeing affordability improve in Québec over the six
previous quarters, the province recorded a decline in the third
quarter. The DAI is now at 146.0 points, indicating that Qué-
bec households’ average disposable income is about 46.0%
higher than the income mortgage lenders require to finance
the purchase of an average priced residence. The resale mar-
ket had been in balance during the recession, but is now
undergoing a shortage again. This situation, which puts upside
pressure on prices, contributed to the DAI’s deterioration.

Ontario Québec

Index Index Index Index

160 160 200 200

190 190
150 150

130.2 180 180

140 140
170 170
130 130
Average 160 146.0 160

120 120 150 Average 150

140 140
110 110
T rend D AI 130 T rend DAI 130
100 100
120 120
90 90
110 110

80 80 100 100
1988 1991 1994 1997 2000 2003 2006 2009 1988 1991 1994 1997 2000 2003 2006 2009

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

François Dupuis Yves St-Maurice

Vice-President and Chief Economist Director and Deputy Chief Economist 418-835-2450 or 1 866 835-8444, ext. 2450
Hélène Bégin Jean-Michel Goulet E-mail: desjardins.economics@desjardins.com
Senior Economist Economist

NOTE TO READERS: The letters k, M and B are used in texts and tables to refer to thousands, millions and billions respectively.
IMPORTANT : This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained
from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation
for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area
of investment services. The data on prices or margins are provided for information purposes and may be modified at any time, based on factors such as market conditions. The past performances and projections expressed herein are
no guarantee of future performance. The opinions and forecasts contained herein are, unless otherwise indicated, those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins
Group. Copyright © 2009, Desjardins Group. All rights reserved.
 Desjardins Affordability Index October 28, 2009 www.desjardins.com/economics

AFFORDABILITY IN CENSUS
METROPOLITAN AREAS (CMA)
Vancouver is by the far the country’s most expensive market,
with an average home price of $603,165 in the third quarter.
From the second to third quarters, the market saw prices
explode, rising an average of $92,499. In the Olympic year,
with British Columbia’s jobless rate down from 8.1% in June
to 7.4% in September, we cannot expect affordability to improve
over the medium term. While the average home price was
rising almost throughout the country in the third quarter, the
Calgary CMA saw prices decline by a quarterly 2.0%. The
Desjardins Affordability Index (DAI) thus improved in Q3 in
Calgary, which joins the affordable market group for the first
time since 2005.
QUÉBEC
In the third quarter, price growth caused affordability to
deteriorate in all Québec CMAs, except for Saguenay. This
was the only market to see the average home price go down
(-6.8%) compared with increases ranging from 0.6% to 3.7% in
the five other CMAs.
The biggest decline in affordability occurred in Québec (6.3
points), where average disposable income fell by 1.0% in the
third quarter ($64,042). Sherbrooke and Trois-Rivières also
saw the DAI plunge, with respective changes of 4.2 points
and 5.3 points.
In Montréal and Ottawa–Gatineau, affordability declined more
moderately (2.8 points and 2.3 points). Montréal’s more modest
change is due to a quarterly increase in prices (3.3%) that was
somewhat offset by a 1.0% increase in average disposable
income ($63,459).
ONTARIO
Although the DAI fell substantially in most of the CMAs,
they were all affordable in the third quarter of 2009. Like Qué-
bec, just one CMA—Kitchener—saw affordability improve,
once more becoming an affordable market after spending a
little time in the «to watch closely» zone during the second
quarter.
Affordability deteriorated the most in Greater Sudbury, with
the DAI down by a quarterly 10.5 points due to a 5.1% increase
in the average home price. Then come Hamilton and
Windsor, with respective DAI declines of 6.9 points and 4.7
points. Windsor’s drop in affordability is due to a quarterly
2.1% decline by average disposable income ($63,938). In Wind-
sor, average disposable income is down by 4.7% in the last
year, showing that the auto sector crisis has dealt a severe
blow.
In Kingston, Oshawa, Toronto and London, affordability is
down from 2.2 points to 3.4 points in the third quarter.
Toronto’s 3.4-point pullback by the DAI results from two
opposing forces: a quarterly 5.2% increase in the average
home price ($402,762) and 2.0% rise by average disposable
income ($89,561).
The St. Catharines–Niagara and Thunder Bay markets saw
the smallest declines by the DAI, with respective decreases
of 1.3 and 0.7 points. The quarterly deterioration of 1.9%
($140,229) in the average home price in Thunder Bay allowed
this index to remain steady despite a 1.6% decline in average
disposable income ($61,327).
Hélène Bégin
Senior Economist
Jean-Michel Goulet
Economist

Québec Census Metropolitan Areas (CMA)

(CMA) Ontario Census
Census Metropolitan Areas (CMA)

Index Index Index Index

240 240 200 200
230 Q 3 2009 230 190 Q 3 2009 190
220 220 180 180
Historical average Historical average
210 210 170 170
200 200 160 160
190 190 150 150
180 180 140 140
170 170 130 130
160 160 120 120
150 150 110 110
140 140 100 100
130 130
ra

y
n

on

ay
n
r

or
a

ne

ur
to

ga
do
w

nt

ds
ilt

rB

120 120
a

db
gs

he
ro

ia
n
sh

am

in

Lo

de
N
in

To

Su
it c

W
O

110 110
s-
H
K

un
K

r
ne

te
Th

100 100
ri

a
ha

re
G
at

Saguenay Q uébec Sherbrooke T rois- M ontréal O ttawa-

.C

Rivières G atineau
St

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

2
Desjardins Affordability Index October 28, 2009 www.desjardins.com/economics

Desjardins Affordability Index

Chan ge Level gap 2009Q3 2009Q2 High Low Average

CANADA -7.6 126.5 134.1 158.1 93.6 129.0

QUÉBEC -3.2 146.0 149.2 191.6 112.4 154.1
ONT ARIO -5.2 130.2 135.5 155.9 86.5 130.6
M e tro p olitan Are as
Saguenay 12.3 201.4 189.1 255.9 159.3 209.0
Q uébec -6.3 166.5 172.8 223.0 131.2 180.6
Sherbrooke -4.2 132.7 136.9 208.8 112.1 161.1
T rois-Rivières -5.3 188.1 193.4 238.1 134.3 191.9
Montréal -2.8 131.3 134.1 180.6 99.4 138.8
O ttawa-G atineau -2.3 157.2 159.5 185.2 110.1 156.7
Kingston -2.9 143.0 145.8 174.3 94.4 142.1
O shawa -2.2 146.7 148.9 179.0 83.0 142.6
T oronto -3.4 125.8 129.1 142.4 72.3 118.6
Hamilton -6.9 138.0 144.9 164.8 85.7 137.5
Kitchener 8.0 151.7 143.7 180.9 90.9 146.2
Windsor -4.7 186.5 191.2 200.0 116.5 172.6
London -2.2 152.7 154.9 177.2 97.3 144.4
St.Catharines-Niagara -1.3 144.3 145.5 167.9 93.4 140.6
T hunder Bay -0.7 191.4 192.1 217.1 125.7 177.3
G reater Sudbury -10.5 171.6 182.2 218.1 120.5 169.0
CALG ARY 3.9 172.6 168.6 210.3 113.1 168.9
VANCO UVER -14.8 80.0 94.8 111.5 62.5 87.0
Sourc es : Statis tic s Canada, Conf erenc e Board of Canada, Canadian Real Es tate A s s oc iation and Des jardins , Economic Studies

The Desjardins Affordability Index is calculated by determining the ratio between the average household disposable income and the income needed
to obtain a mortgage on an average-priced home (qualifying income). Qualifying income is calculated based on the cost of owning a home (mortgage
payments, property taxes and utility costs). An information document on the DAI is available on our Web site: http://www.desjardins.com/economics

Gap
Gap between the DAI
DAI and its historical
historical average Gap between the
the DAI
DAI and
and its historical
historical average
average

O ttawa-G atineau
Vancouver
Hamilton
Kingston
Q uébec
G reater Sudbury
Calgary Affordable
(higher than the historical average) M ontréal To watch closely
St.Catharines-Niagara (less than 10% below the historical average)
Oshawa
Saguenay
Kitchener
London
T rois-Rivières
T oronto
Not very affordable (10% and more below the historical average)
T hunder Bay
Sherbrooke
Windsor

In % 0 1 2 3 4 5 6 7 8 9 In % -18 -16 -14 -12 -10 -8 -6 -4 -2 0

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

Vancouver Calgary

Index Index Index Index

115 115 215 215

T ren d DAI 205 T rend DAI 205

105 105 195 195

185 185
95 95
175 175

165 Average 165

85 Average 85
155 155

145 145
75 75
135 135

125 125
65 65
115 115

55 55 105 105
1988 1991 1994 1997 2000 2003 2006 2009 1988 1991 1994 1997 2000 2003 2006 2009

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

3
 Desjardins Affordability Index October 28, 2009 www.desjardins.com/economics

Saguenay Québec

Index Index Index Index

230 230
255 255
T rend DAI 220 T ren d DAI 220
245 245
210 210
235 235
200 200
225 225
190 190
215 215
Average 180 Average 180
205 205

195 195 170 170

185 185 160 160

175 175 150 150

165 165 140 140

155 155 130 130

1988 1991 1994 1997 2000 2003 2006 2009 1988 1991 1994 1997 2000 2003 2006 2009

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

Sherbrooke Trois-Rivières

Index Index Index Index

220 220 240 240
210 T ren d DAI 210 230 T ren d DAI 230
200 200 220 220
190 190
210 210
180 180
200 200
170 170
190 Average 190
160 Average 160
180 180
150 150
170 170
140 140
130 130 160 160

120 120 150 150

110 110 140 140

100 100 130 130

1988 1991 1994 1997 2000 2003 2006 2009 1988 1991 1994 1997 2000 2003 2006 2009

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

Montréal Ottawa-Gatineau

Index Index Index Index

188 188 188 188

178 T ren d DAI 178 T ren d DAI

178 178

168 168
168 168
158 158
158 158
Average
148 148
148 148
138 138
Average
138 138
128 128
128 128
118 118

108 108 118 118

98 98 108 108
1988 1991 1994 1997 2000 2003 2006 2009 1988 1991 1994 1997 2000 2003 2006 2009

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

Kingston Oshawa

Index Index Index Index

180 180 180 180

170 T ren d DAI 170 170 170

160 160
160 160
150 150
150 150
140 Average 140
140 140
Average
130 130
T ren d DAI
130 130
120 120
120 120
110 110

110 110 100 100

100 100 90 90

90 90 80 80
1988 1991 1994 1997 2000 2003 2006 2009 1988 1991 1994 1997 2000 2003 2006 2009

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

4
Desjardins Affordability Index October 28, 2009 www.desjardins.com/economics

Toronto Hamilton

Index Index Index Index

150 150 170 170

T ren d DAI 160 T rend DAI 160

140 140

150 150
130 130
140 140
120 120 Average
Average
130 130
110 110
120 120
100 100
110 110
90 90
100 100

80 80 90 90

70 70 80 80
1988 1991 1994 1997 2000 2003 2006 2009 1988 1991 1994 1997 2000 2003 2006 2009

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

Kitchener Windsor

Index Index Index Index

190 190 210 210

180 T ren d DAI 180 200 T rend DAI 200

170 170 190 190

160 160 180 180

150 150 170 Average 170

Average
140 140 160 160

130 130 150 150

120 120 140 140

110 110 130 130

100 100 120 120

90 90 110 110
1988 1991 1994 1997 2000 2003 2006 2009 1988 1991 1994 1997 2000 2003 2006 2009

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

London St.Catharines-Niagara

Index Index Index Index

180 180 170 170

170 T ren d DIA 170 160 160

160 160
150 150
150 150
140 Average
140
140 Average 140
130 130
130 130
120 120
120 120 T rend D AI

110 110
110 110

100 100 100 100

90 90 90 90
1988 1991 1994 1997 2000 2003 2006 2009 1988 1991 1994 1997 2000 2003 2006 2009

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies

Thunder Bay Greater Sudbury

Index Index Index Index

230 230 220 220
220 T ren d DAI 220 210 T ren d DAI 210
210 210 200 200
200 200 190 190
190 190 180 180
180 180 170 170
Average Average
170 170 160 160
160 160 150 150
150 150 140 140
140 140 130 130
130 130 120 120
120 120 110 110
1988 1991 1994 1997 2000 2003 2006 2009 1988 1991 1994 1997 2000 2003 2006 2009

Source: Desjardins, Economic Studies Source: Desjardins, Economic Studies