Although the vulnerability of Canada’s housing market has been downgraded to “moderate,” Hamilton’s market is still “vulnerable,” according to a new housing market assessment report from the Canada Mortgage and Housing Corporation (CMHC).
The CMHC report says the state of the national housing market has changed to “moderate” after 10 consecutive quarters of being rated “highly vulnerable.”
Meanwhile, the market in Hamilton remains “vulnerable,” as do the markets in Toronto, Vancouver and Victoria, B.C.
The CMHC’s housing market assessment looks at four main factors to determine vulnerability in the housing market: overheating, overbuilding, price acceleration and overvaluation.
Overheating is when the demand for property is higher than the number of properties in the market, while overbuilding is when there are more newly built or unsold homes or unrented properties than usual. Price acceleration happens when home prices are trending upward. Overvaluation is determined by house prices compared to the price level at which homes should be when considering the average person’s disposable income, a city’s population, interest rates and other factors.
Hamilton was ranked “moderate” in terms of overheating, price acceleration and overvaluation but “low” in the area of overbuilding.
Anthony Passarelli, senior market analyst with CMHC, said the report indicates the overvaluation factor is decreasing in Hamilton.
“In Hamilton, the fundamentals are quite strong. We’re seeing strong population growth, employment at a high level, incomes are growing, so those are all positive,” said Passarelli. “And we’re seeing some catch-up with prices that were growing a lot faster than those fundamentals a few years ago.”
The report is based on data as of the end of December 2018 and market intelligence up to the end of March 2019.