CMHC spies trouble ahead for housing markets
Report hightlights Toronto and Calgary, but other cities also show signs of risk
Toronto and Calgary residential real estate markets are showing strong evidence of “problematic” conditions, Canada’s federal housing agency said in a report, adding to concern that risks in the nation’s housing sector are growing.
The determination reflects a combination of price acceleration and overvaluation in Toronto, and overvaluation and overbuilding in Calgary, Canada Mortgage & Housing Corp. (CMHC) said Wednesday in its quarterly Housing Market Analysis.
Saskatoon and Regina are also showing “strong” signs of problematic housing markets.
Toronto’s ranking was unchanged from October, while Calgary’s risk worsened to “strong” evidence from “weak” in the prior quarter.
Vancouver shows signs of “moderate” overvaluation, unchanged from the previous quarter.
Finance Minister Bill Morneau introduced a package of tighter homelending rules in December, citing risks from a surge in prices in Toronto and Vancouver that leave some younger families at risk from outsized mortgages.
Prices of single-family homes in those cities often exceed a million dollars and have sparked a surge in condo construction that has drawn warnings from the International Monetary Fund.
“In Toronto, overall strong evidence of problematic conditions reflects a combination of price acceleration and overvaluation,” the CMHC report said.
“We are also monitoring for the potential emergence of overbuilding in Toronto due to the high number of condominium units under construction.