After 10 straight quarters of relative high vulnerability, the Canadian residential real estate segment has moved to more robust conditions amid slower price growth, according to the latest Housing Market Assessment by the Canada Mortgage and Housing Corporation.
Covering 15 major census metropolitan areas (CMAs) nationwide, the report found that compared to the end of February, “the state of the national housing market has improved to moderate vulnerability” as of this month.
In addition, “even though moderate evidence of overvaluation continues for Canada as a whole, there has been improved alignment overall between house prices and housing market fundamentals in 2018 in comparison to the previous year,” CMHC chief economist Bob Dugan stated.
Steady moderate levels of vulnerability in Calgary, Edmonton, Regina, Saskatoon, and Winnipeg helped buoy the national market’s prospects, although there is still evidence of overbuilding in these markets.
“In Edmonton, where the rental market is tightening, the imbalance between supply and demand in the ownership market is widening. As of February 2019, 61% of the total single- and semi-detached inventory in Alberta’s seven largest markets combined were in Edmonton,” the assessment explained.
Meanwhile, high vulnerability remains in Vancouver, Victoria, Toronto, and Hamilton, although these markets are moving “closer to levels supported by housing market fundamentals such as population, personal disposable income and interest rates.”
In particular, the triggers for overheating in Vancouver have weakened. “Home price growth over the past few years significantly outpaced income growth; these imbalances are now unwinding based on continued growth in economic fundamentals and lower resale home prices.”
Similarly, conditions of overvaluation in Toronto are easing. “Market activity continued to cool during the first quarter of 2019, with the sales-to-new listings ratio remaining firmly in balanced market territory and the MLS® average price continuing to decrease.”