CMHC Q1 Report Calls Out Riskiest Canadian Markets

The Riskiest Canadian Markets

“Location, location, location” is the age-old real estate mantra. And where you happen to live in Canada right now will have a major impact on the value of your personal slice of the country’s real estate market. The CMHC’s latest Housing Market Report for the first quarter of 2016 calls out four cities in particular – Calgary, Saskatoon, Regina, and Toronto – as “problematic…overvalu[ed] and overbuil[t].” But residents of other cities shouldn’t gloat, as those potentially problematic conditions exist in most major markets.

INFOGRAPHIC: 2015 Canadian Mortgage Stats>

The National Perspective

This CMHC analysis looks at 15 major urban areas for signs of overvalued or overbuilt housing stock. Overall, the CHMC feels Canadian house prices are moderately overvalued. In the agency’s interpretation, “house prices remain higher than levels consistent with personal disposable income, population growth and other factors.”

One major concern for a drop in prices is an oversupply of housing stock. “The evidence of overbuilding has increased since the previous assessment in Calgary, Saskatoon, Regina, and Ottawa due to either higher vacancy rates, high inventory of new and unsold units, or a combination of both. As more centres are now showing problematic overbuilding conditions, inventory management is becoming more important,” said the CMHC’s chief economist, Bob Dugan, in a press release.

Skip down to your city for a glimpse of where the local market seems to be heading.

Also read: Luxury Real Estate is Fastest Growing Canadian Market>

Cities with “weak evidence of problematic conditions”

Victoria: In Victoria, while sales volume was high and prices did climb, “price growth…was supported by population growth.”

Vancouver: While prices were slightly overvalued, particularly with detached homes, vacancy rates remain extremely low.

Hamilton: “Moderate evidence of overheating” is buffered by strong employment numbers.

Moncton: Rising house prices remain in line with inflation, so the CMHC sees no cause for concern in Moncton.

Halifax: A cooling housing market has lowered the risk of overvaluation in Halifax, but poor employment and earnings figures could lead to a decline in prices.

St. John’s: There’s a moderate oversupply of new housing, but the low vacancy rate – “supported by retirees exiting homeownership” – suggests a stable market.

Cities with “moderate evidence of problematic conditions”

Edmonton: A record-number of new housing starts has lead to an oversupply.

Winnipeg: A growing economic and pool of first-time buyers seems to be buffering a slight oversupply of new housing.

Ottawa: Ottawa shows signs of moderate overbuilding, but overall conditions have improved since the last CMHC assessment.

Montreal: The overall picture is good for Montreal, but the CMHC warns local builders to manage inventory “to make sure that the currently elevated number of condominium units under construction does not remain unsold upon completion.”

Quebec City: The CMHC says “strong evidence of overvaluation remains the main concern” in Quebec’s capital city.

Cities with “strong evidence of problematic conditions”

Calgary: It’s no surprise that the drop in oil prices has effected the local real estate market, in part because large numbers of migrant workers who once flocked to Alberta for jobs, have moved elsewhere seeking employment.

Saskatoon: Demographics and a local economic downturn have combined to produce an oversupply of housing in Saskatoon.

Regina: A large number of new condos and a high vacancy rate suggest local prices are inflated.

Toronto: In Toronto there is “strong evidence of overvaluation” in the heated detached housing market. Still high demand for condos makes it a seller’s market for condo resales.

Also read: Toronto Home Prices – 20 Straight Years of Growth>

The next quarterly CHMC Housing Market Report will be released on April 27, 2016.

Related Topics

Buying A Home / Mortgage News / Mortgages

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