Research Briefing | May 3, 2022

The dynamics behind deteriorating housing affordability in North America

The dynamics behind deteriorating housing affordability

Housing affordability worsened in Q4 2021 at the national level in both the US and Canada, according to our updated Housing Affordability Indices (HAIs), as income gains failed to offset the impact of higher home prices and interest rates. Potential buyers found houses most beyond reach in Vancouver, Boise (Idaho), Toronto, Hamilton (Ontario), Portland (Oregon), Victoria, Las Vegas, Los Angeles, and San Jose. Higher interest rates and wage growth that lags inflation will further constrain affordability in 2022.

What you will learn:

  • Our US national HAI rose 3pts from 0.77 in Q3 2021 to 0.80 in Q4 2021, indicating prices were 20% lower than the median income households’ borrowing capacity in the final months of the year.

  • US affordability saw the fastest deterioration in the Southeast and Mountain metros in Q4, led by Miami (+5.9pts), Raleigh (+5.3pts), and Nashville (+5.1pts). The Pacific continued to be the most unaffordable US region.

  • Our national Canadian HAI deteriorated 7pts to 1.42 in Q4 amid rising house prices and an uptick
    in mortgage rates.

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