Housing market conditions in Canada remain “problematic,” the Canada Mortgage and Housing Corp. said in its latest quarterly report.
Canadian homes remained overvalued, as prices climbed and disposable income dipped in every province except British Columbia, the federal housing agency said. And prices remained high despite slower growth in the country’s young adult population, which fuels demand from first-time homebuyers.
Toronto and Hamilton continue to show strong evidence of overall problematic conditions due to price acceleration, overvaluation and overheating due to demand outpacing supply in the rental, resale and new home markets.
The CMHC’s assessment comes after the Ontario government introduced rules aimed at cooling housing markets in the province’s southern regions.
The report says the evidence of overheating in the Vancouver market has increased from weak to moderate due to townhomes and apartments seeing high demand.
Meanwhile, evidence of overbuilding has increased from six centres to seven as Quebec’s rating grew from weak to moderate due to a high number of rental apartment starts outpacing demand.
Markets in the Prairies continue to show moderate to strong signs of overbuilding, including in Calgary and Edmonton.
The agency found weak evidence of problematic conditions in Atlantic Canada.
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Bidding wars are now common for townhouses and apartments, too, as first-time homebuyers and families pile into the slightly less expensive section of the market.
The market remains overvalued, with demand outstripping supply despite increased construction activity. Rental vacancies are low, too.
Calgary and Edmonton
The CMHC see signs of overbuilding, especially for apartments. Notably, Calgary has seen its young adult population (ages 25 to 34) decrease for the first time in over 20 years. That is also contributing to higher vacancy rates.
Here, the housing agency sees moderate evidence of overvaluation and strong evidence of overbuilding. An improving economic picture and positive demographic trends, though, should help bring prices in line with incomes and buyers’ demand.
Regina’s stock of unsold homes also points to significant overbuilding.
The city is on course to absorb good chunks of its current inventory of unsold homes in the next few months, dissipating any evidence of overbuilding.
Hamilton and Toronto
Price growth has slowed since earlier this year but is still far above what economic conditions and demographic trends support. In Toronto, the average price growth
of condo apartments is catching up to that of single-detached homes.
All is well in the capital, according to the CMHC. “We detect weak evidence for all other indicators of problematic conditions,” the report reads.
Prices are rising in Montreal but at a pace justified by demographic and income trends.
Vacancies are rising here, especially for rental units.
Average prices for existing homes were essentially unchanged.
Thicker ranks of young people here are providing healthy demand for the city’s inventory of homes available for sale.
The city has a low-risk profile from the CMHC’s point of view, but the housing market situation paints the picture of a struggling economy. Rental vacancy rates are climbing and younger people are skipping town to look for jobs elsewhere, the report said.
– With files from The Canadian Press