Real estate is ‘overvalued’ across much of the country, CMHC warns


TORONTO – Canada Mortgage and Housing Corp. says it has detected overvaluation in 11 housing markets, with additional concerns flagged specifically in Toronto, Winnipeg, Saskatoon and Regina.

A new CMHC report released today says acceleration in home prices and overvaluation — which occurs when prices aren’t supported by fundamental drivers such as income and population — suggest that trouble may be brewing in Toronto.

In Winnipeg, Saskatoon and Regina, the federal agency says it has found evidence of overvaluation and overbuilding, which occurs when the supply of homes outpaces the demand.

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Saskatoon was not identified as problematic in CMHC’s last quarterly assessment as only one risk factor was present that city — overbuilding. But since then the agency has found signs of overvaluation in its real estate market, as well.

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CMHC says an overbuilding of condo units may also be emerging in Toronto, Montreal and Ottawa, and the agency is monitoring those markets for developments.

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Meanwhile, the agency says evidence of problematic conditions in Vancouver is weak, although signs of overvaluation are beginning to emerge.

CMHC’s chief economist Bob Dugan said it has found overvaluation in 11 out of 15 of the markets tracked by the report, making it the most prevalent of the issues the agency has detected in Canadian real estate markets.

MORE: Burbs around Vancouver, Toronto no bargain for house hunters, either

“The evidence of overvaluation has increased since the previous assessment in Toronto, Vancouver, Montreal, Edmonton, and Saskatoon as price levels are not fully supported by economic and demographic factors,” Dugan said in a statement.

“Problematic overvaluation conditions in local housing markets could be resolved by moderation in house prices and/or improving economic conditions.”

CMHC’s housing market assessment report aims to identify potential risks in Canadian real estate nationally and in 15 markets by evaluating economic, financial and demographic factors.

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

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WATCH: Hilliard MacBeth, financial advisor and author, discusss why he believes the Canadian real estate market sits on the brink of one of the biggest crashes ever.


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