CMHC Identifies Housing Market Risks in Several Canadian Cities

According to the federal housing agency, there is moderate evidence of overvaluation and overbuilding of real estate in Canada's major housing markets. The Canadian Mortgage and Housing Corporation analyzes housing markets in 15 Canadian cities every quarter in order to identify housing bubbles.

The first-quarter CMHC report found that properties were generally overvalued in 8 of 15 Canadian cities through its housing market assessment. Seven cities also showed problematic signs of overbuilding.

Cities like Calgary, Regina and Saskatoon are facing overbuilding of real estate and overvaluation. Prices are high and the building continues as the price of oil is low. The federal housing agency stated that the level of housing prices is not supported by the economic conditions. Prices remain high despite rising vacancies and falling demand for housing.

CMHC is keeping track of Toronto's condo market for the possibility of overbuilding as rapid price acceleration in the past year has led to prices that are very high for detached homes. CMHC suggested that Toronto has a high number of condominium units under construction and this can become problematic if condos currently under construction remain unsold after they are built.

Cities such as Victoria, Vancouver, Hamilton, Moncton, Halifax and St. John's showed the fewest signs of trouble within its housing markets.

Reference:

CBC News

http://www.cbc.ca/…/busi…/cmhc-housing-prices-risk-1.3422284

CTV News

http://www.ctvnews.ca/…/too-pricey-too-many-cmhc-reports-mo…