Buying real estate as an investment is one thing but buying a home to live in is another.  As an investor your main concern is whether or not your property will cash flow (give you a few dollars in the bank each month).  As a homeowner your concern is whether or not you can afford the monthly expenses that go along with ownership.  That’s where the affordability index comes in.

The affordability index takes into account how much of your pre-tax income is needed to cover the costs of home ownership like mortgage payments, property taxes and utilities each and every month. While the cost of buying a home in Alberta have been off the charts in the last couple of years, the affordability of owning one hasn’t been.  That doesn’t seem to make sense until you realize that we have enjoyed an undervalued market for a long time and this recent increase in affordability has just brought us par with the rest of the country.

If you are looking to buy property in Alberta there is good news as the market is cooling off from the craziness we have just come through in the real estate market.  If you want the best deal you should look at condos as they have showed improvement when it comes to affordability whereas single family dwellings and townhouses have showed only a modest reduction.

The better news is that the Calgary market shows that the average weekly earnings are increasing about 5% compared to a year ago and that coupled with a plateauing housing market means the home that was out of reach last year could be yours this year.  The price increase of homes is predicted to drastically change from last year’s 30% increase to a more reasonable 8% in 2008.

Rhonda Hoffman

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