CMHC Raises Its Overall Risk Rating for National Housing Market to Strong

27-10-2016 System Administrator November 2016 0 Comments

The Canada Mortgage and Housing Corporation (CMHC) issued a red alert for the real estate situation across the country.

The latest report from CMHC says that most markets across the country are overvalued. This report adds Hamilton to the list along with Vancouver, Toronto, Calgary, Regina and Saskatoon in the “red” category.

"There is growing evidence of risk in the country's real estate markets as home prices have climbed faster than income and population growth," the report by Canada's federal housing agency states.

CMHC had increased its risk rating for the national housing market to Strong, from a Moderate rating that it gave in July. "We now see strong evidence of problematic conditions overall nationally," CMHC's chief economist Bob Dugan said in a news release.

"This is fuelled by overvaluation—meaning house prices remain higher than the level of personal disposable income, population growth and other fundamentals would support. This overvaluation coupled with evidence of overbuilding in some centres means that growth in house prices will slow and housing starts are expected to moderate in 2017 and 2018."

The agency also said it now sees moderate evidence of price acceleration. That occurs when home prices go up at a faster pace and is a possible sign of speculation. Back in July, evidence of price acceleration was weak, the agency said.

The report shows that things have cooled off from the beginning of the year, but Robyn Adamache with the CMHC says there are still signs of overvaluation, price acceleration, and an overheated market. CMHC is also predicting that the pace of new housing starts will decline next year before stabilizing in 2018.


The housing market assessment is intended to be an early warning system to alert Canadians about problematic conditions developing in the country's real estate markets. It covers 15 regional markets and the national housing market as a whole.

 




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