Some of Canada’s biggest cities are likely facing a major correction in the housing market.
The Canada Mortgage and Housing Corporation (CMHC) will be issuing its first “Red Alert” later this month. The organization is looking at home values and debt loads and says the numbers just do not add up.
According to the Bank of Canada, household indebtedness has never been higher in Canadian history.
Real estate prices in Toronto and Vancouver have recently skyrocketed but with even more recent changes in mortgage rules and foreign investment, the CMHC says it believes there is the potential for major price corrections in those markets.
According to the Calgary Real Estate Board’s Anne Marie Lurie, Calgary probably will not deal with as significant of a correction.
“Calgary has been a little different because we have already been facing price corrections due to overall economic climate,” she said on Monday. “So we have seen demand reduced in our market at the same time supply levels have risen a bit and that has caused a natural price easing.”
One mortgage broker Global News spoke with said they believe the effects of a correction in Calgary would likely be felt in homes in the lower price ranges because home buyers would end up paying more.