Unsold homes and condos are piling up in several Canadian cities: CMHC

The Saskatchewan Construction Association is asking all levels of government to fast-track construction projects during the COVID-19 pandemic. Credit/THE CANADIAN PRESS

TORONTO – Canada Mortgage and Housing Corporation says evidence of overbuilding has grown in real estate markets in Calgary, Saskatoon, Regina and Ottawa.

The housing agency says higher vacancy rates and an increase in the inventory of new, unsold units are responsible for the rise in overbuilding.

CMHC defines overbuilding as an indication that supply in the housing market significantly outpaces demand.

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CMHC’s house price analysis and assessment aims to identify potential risks in Canadian real estate by evaluating economic, financial and demographic factors in a total of 15 housing markets.

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.

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Overall, CMHC says it has found strong evidence of problematic conditions in Toronto, Calgary, Saskatoon and Regina. In Toronto, CMHC says it has found evidence of price acceleration and overvaluation and is also looking at the possibility that overbuilding could become an issue, particularly in the condo market.

“As more centres are now showing problematic overbuilding conditions, inventory management is becoming more important,” Bob Dugan, CMHC’s chief economist, said in a statement.

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