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Toronto, Winnipeg, Regina face ‘high’ risk of housing downturns: CMHC

A rapid rise in condominiums across Toronto in recent years continues to worry some -- including the country's housing agency.
A rapid rise in condominiums across Toronto in recent years continues to worry some -- including the country's housing agency. Rene Johnston/Toronto Star via Getty Images

TORONTO – A new report from Canada’s federal housing agency says Toronto, Regina and Winnipeg face a high risk of a housing corrections due to a combination of factors including overvalued home prices.

The CMHC report says a rapid increase in home prices this year and overvaluation are responsible for the “high” level of risk in Toronto.

Back in April, the national housing agency pegged Toronto as being at only a “moderate” risk of a correction.

MORE: Liar loans help inflate Toronto’s pricey housing markets, experts say 

CMHC also says Winnipeg faces a high level of risk due to overvalued home prices and overbuilding.

In Regina, rapid price growth, overvaluation and overbuilding, especially of condo units, are responsible for the high risk rating.

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CMHC says housing market risk in Vancouver, one of the country’s priciest real estate markets, is low, as none of the individual risk factors that the agency examines are present.

CMHC’s house price analysis and assessment aims to identify potential risks in Canadian real estate by evaluating economic, financial and demographic factors.

MORE: Sturdy as a house of cards? A look at Canada’s property boom 

The agency uses four factors to identify the level of risk present in regional housing markets: overheating of demand, accelerating price growth, overvaluation of prices and overbuilding.

“Nationally, CMHC continues to detect a modest risk of overvaluation,” Bob Dugan, CMHC’s chief economist, said in a statement.

“However, our overall assessment of the risk of problematic conditions varies from centre to centre due to regional differences in housing markets. Imbalances in local housing markets could be resolved with further moderation in house prices or improving economic conditions.”