The Canada Mortgage and Housing Corporation (CMHC) says the housing market across the country is still showing a high degree of vulnerability despite recent price corrections and downturns in major markets such as Toronto and Vancouver.
In its quarterly housing market assessment, CMHC said there is still market overvaluation — one of four factors the agency tracks to evaluate market vulnerability — in Canada's sky-high housing markets. Overvaluation occurs when house prices are elevated compared to personal disposable income, population, interest rates and other factors.
Despite a sharp downturn in recent months, the Vancouver housing market remained largely overvalued between the last quarter of 2018 and the first of quarter of 2019, while in Toronto it moved from high to moderate overvaluation.
Additionally, the CMHC report found that there is moderate overall vulnerability in Edmonton, Calgary, Saskatoon, Regina and Winnipeg, where there is moderate to high overbuilding. That's when the number of rental vacancies and unsold newly built housing units are higher than normal.
The findings in the report are based on factors such as the level of imbalances in the housing market related to overbuilding, overvaluation, overheating and price acceleration when compared with historical averages.
CMHC noted though that Canada’s overall vulnerability rating could be downgraded in future quarters due to signs that overheating and overbuilding remain low in some smaller markets such as Halifax and Ottawa.
