CMHC tags five markets as still in ‘red zone’

VULNERABILITY

overvaluation and overbuilding.

“It’s an early indication of imbalances in the housing market,” said Bob Dugan, chief economist with CMHC, about the red label which was also given to the entire country. “Not a whole lot has changed from the last quarter. of completed and unsold homes. Vacancy rates in both (Calgary and Edmonton) have been signalling overbuilding for several quarters,” said Dugan.

CMHC’s valuation is part of its quarterly Housing Market Assessment, something the Crown corporation calls will decline this year after a record 535,000 transactions through the Multiple Listing Service system in 2016.

New construction in 2017 will top 200,000, a jump from a year earlier with a range of 206,300 to 214,900 predicted.

By 2018, the range for starts is forecast to drop to 192,200 to 203,000 and stabilize at 192,300 to 203,800 in 2019.

“Looking ahead, high house prices, particularly for single-family homes, and rising mortgage rates will bring about some cooling in market activity,” said Dugan.

CMHC said existing home prices peaked at an average of $536,000 for the country earlier this year but for all of 2017, the organization says there will be a year-overyear increase in the range of $493,900 to $511,300. By next year, the range of the average sale price of an existing home across the country will be $491,900 to $512,100 and then $499,400 to $524,500 in 2019.

“We do expect prices increasing but at a slower pace,” said Dugan, noting average prices rose in 2016 largely based on more sales in expensive markets and home types like single detached homes having strong activity. “It pushed up the average price.”