CMHC report calls Vancouver housing market ‘overheated’ and problematic

Canada’s national housing agency added to the alarm bells ringing over Vancouver’s real estate sector after it released a report Wednesday saying there is now strong evidence of problematic conditions in the city.

In a quarterly housing market assessment, Canada Mortgage and Housing Corp. increased its risk rating for Vancouver to its highest level for the first time since it began releasing the reports last year.

The housing agency said it is seeing evidence of an overheated market, which occurs when demand outstrips supply, and price acceleration in the city. Previously, it had said there was strong indications of overvaluation as prices for single detached homes have soared higher than what economic fundamentals can support.

Robyn Adamache, a principal market analyst for CMHC, said there have been signs of overheating in Vancouver’s real estate market for some time, but the agency didn’t want to prematurely signal that warning.

“We had been waiting for a couple of quarters of evidence to be able to make that call,” Adamache said. “And part of what contributed to making that call this quarter is that we have started to see the multi-family sector, including both townhomes and apartments, also moving into overheated conditions in terms of the sales-tonew listings ratio, whereas before it was only on the single-family side.”

The assessment is intended to be an early warning system to alert Canadians about problematic conditions developing in the country’s real estate markets.