CMHC releases report on health of various housing markets

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Four major metropolitan areas show strong evidence of problematic housing market conditions, according to a report from the Crown Corporation.

CMHC’s Housing Market Assessment (HMA), released Thursday afternoon, points to “strong evidence” of problematic conditions in Toronto, Winnipeg, Saskatoon, and Regina.

According to the report, Toronto’s analysis is a reflection of price acceleration and overvaluation; the other markets show evidence of overvaluation and overbuilding.

Other markets, meanwhile, are at risk of overvaluation.

“The most prevalent issue detected in 11 of the 15 centres covered by the HMA is overvaluation. The evidence of overvaluation has increased since the previous assessment in Toronto, Vancouver, Montréal, Edmonton, and Saskatoon as price levels are not fully supported by economic and demographic factors,” said Bob Dugan, CMHC’s Chief Economist. “Problematic overvaluation conditions in local housing markets could be resolved by moderation in house prices and/or improving economic conditions.”

Noticeably left off the list of problematic markets is Vancouver.

“The HMA points to weak evidence of overall problematic conditions in Vancouver, though we are now detecting moderate evidence of overvaluation,” CMHC said in the report. “However, overheating, acceleration in house prices and overbuilding are not a concern in this market.”

The analysis looked at the national housing market as well as 15 major metropolitan areas -- Vancouver, Victoria, Calgary, Edmonton, Regina, Saskatoon, Winnipeg, Toronto, Hamilton, Ottawa, Montréal, Québec, Moncton, St. John’s and Halifax.

Click here to access the full report.
  • len lane on 2015-10-29 1:05:22 PM

    How did Calgary miss this list?

  • Anthony C. on 2015-10-29 2:31:44 PM

    The report doesn't seem to be be using its definitions of problematic conditions with much consistency, when you carefully read each region's summary...too many conflicting variables are evidenced, which makes it appear that the report is presented to bolster some municipalities which are hugely overpriced and experiencing some economic decline to areas that are for the most part quite robust.

    And then the most cookie cutter solution to "problematic areas" is provided with the following:

    "Problematic overvaluation conditions in local housing markets could be resolved by moderation in house prices and/or improving economic conditions.”

    Silly how this generalized and blatantly obvious solution is the best which the brain-trust at CMHC can offer. Its like saying "poor health could be improved by following proper diet and exercise"...yes...thanks...we get it. But really folks, we all know there are plenty of qualified buyers willing to pay top dollar to get into the market...and the only surefire way to slow this market down would be to substantially increase rates...why can't they just say so?

    If Toronto's overvaluation is considered strong and Vancouver's overvaluation is considered moderate, yet Calgary and Edmonton's markets (bleeding jobs and future investment - by the way) are considered overall to be of low risk in all areas other than overvaluation, then why does GTA MLS resale activity surpass the national average yet still be considered high risk...?

  • P.w.R on 2015-10-31 4:31:13 PM

    Anthony - 2% inflation is the lie. How many Canadians under 25 can afford to pay 5-10% down on 350,000?. Also: we see 20% inflation minimum on all products over this last year. 2%? Workers are being put in the corner while those who simply throw money at the problem will continue to widen the divide between working class and middle class. Education determines class NOT money. Education FREE!!! But the upper class does not want the hard working middle and working class to unite against the tyranny of the upper!

  • Anthony C. on 2015-11-02 11:57:47 AM

    @ P.w.R....with all due respect, I'd like to know what point exactly it is that you are trying to make...? If its about how the average consumer is being squeezing to their last available dime...I agree...but if we are discussing how to effectively cool down an overheated market and grant more affordable access to home ownership, making an altruistic comment about the suffering of the working class against their oppressors, without any actual and practical application for positive change is mute... in the simplest terms and most effective manner, if you want real change (and it could get messy in the interim) then I believe we must look at stemming the stimulus (cheap money), with an adjustment to inflation, thereby creating an increase to the cost of borrowing which effectively reduces the consumer's capacity to debt service big mortgages, which would lead to a re-adjustment or capping of median sale prices across the board due to stagnant sales activity...but on the flip side, this still won't prevent foreign investment from driving up high end homes, as was/is being evidenced in the west coast and in other hot pockets in Toronto, Calgary, Hamilton etc...and yes, I can hear my colleagues in finance screaming bloody murder at the suggestion of slowing down the market...but entry into home ownership via a false climate of cheap money is not going to end well. So we either by design slow down the market with a higher cost of funds, or allow this overvaluated market to continue racing forward and letting the chips fall where they may, with a possible correction in the near future. I for certain do not have the answers but I do have industry work experience and a good recollection of events dating back nearly twenty years, and know that monetary policy has always been the reigns which drive market conditions. Do recall that entry level semi and detached home prices in the GTA as recently as 15 years ago were on average between 4-6 times annual earnings...when mortgage money was averaging between 5% to 6% and now today's average GTA price is between 8 to 10 times annual earnings, with Prime at 2%+...and we have not seen wage increases which should be in step with an increase to the cost of living. 25 years in Canada without a correction is too long and as such, a shakeup has to happen every so often...its good for the herd to thin out the blood from time to time.

  • Anthony C. on 2015-11-02 12:11:03 PM

    @ P.w.R....with all due respect, I'd like to know what point exactly it is that you are trying to make...? If its about how the average consumer is being squeezing to their last available dime...I agree...also, I acknowledge that few Canadians under 25 can afford home ownership...perhaps they should wait a little longer so they can eventually buy a home...but if we are discussing how to effectively cool down an overheated market and grant more affordable access to home ownership, making an altruistic comment about the suffering of the working class against their oppressors, without any actual and practical suggestions on how to effect change is mute... in the simplest terms and most effective manner, if you want real change (and it could get messy in the interim) then I believe we must look at stemming the stimulus (cheap money), with an adjustment to money policy and disclosure, thereby revealing the actual inflation rate, thus creating an increase to the cost of borrowing which effectively reduces the consumer's capacity to debt service big mortgages, which would lead to a re-adjustment or capping of median sale prices across the board due to stagnant sales activity...but on the flip side, this still won't prevent foreign investment from driving up high end homes, as was/is being evidenced in the west coast and in other hot pockets in Toronto, Calgary, Hamilton etc...and yes, I can hear my colleagues in finance screaming bloody murder at the suggestion of slowing down the market and causing by design, a recession of home sale activity...but entry into home ownership via a false climate of cheap money is not going to end well. So we either slow down the market with a higher cost of funds, or allow this overvaluated market to continue racing forward and letting the chips fall where they may, with a possible correction in the near future. I for certain do not have the answers but I do have industry work experience and a good recollection of events dating back nearly twenty years, and know that monetary policy has always been the reigns which drive market conditions. Do recall that entry level semi and detached home prices in the GTA as recently as 15 years ago were on average between 4-6 times annual earnings...when mortgage money was averaging between 5% to 6% and now today's average GTA price is between 8 to 10 times annual earnings, with Prime at 2%+...and we have not seen wage increases which should be in step with an increase to the cost of living. 25 years in Canada without a correction is too long and as such, a shakeup has to happen every so often...its good for the herd to thin out the blood from time to time.

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