Bob Dugan, Chief Economist with CMHC, states “our market assessment continues to show a high degree of vulnerability at the overall national level due to moderate levels of price acceleration and overvaluation existing together.”
Only weak signs of overbuilding and overheating were detected for Canada as a whole, with both indicators well below their threshold levels. However, the sales-to-listings ratio lies above the threshold of overheating and has for at least two quarters over the last three years.
What this means for individual markets
Victoria, Vancouver, and Toronto all scored high vulnerability in overvaluation, indicating that house prices are elevated compared to price levels supported by personal disposable income, population, interest rates, and other fundamentals. And with Amazon’s recent announcement to expand its Vancouver tech hub, housing prices could soar. Vancouver’s supply of available rentals has remained below 1 percent for three years in a row.
Calgary, Edmonton, Saskatoon, and Regina exhibited high evidence of overbuilding. In Edmonton, imbalances in ownership and rental markets were detected. The inventory of completed but unsold units also continued to drift around threshold level, while the apartment vacancy rate remained at threshold level.
For the fifth straight quarter, vulnerability in the Montreal housing market remained low. The level of personal disposable income, combined with the accelerated population growth among young adults, indicated that home prices have remained at justified levels. Still, given the marked tightening of supply and demand, the Montreal resale market is moving ever closer to overheating, which is putting a strong and steady pressure on prices.
“We just have our eye on [Montreal] to see whether price growth remains sustained and maybe spreads to more neighborhoods within Montreal,” said Dugan.
