Strong evidence of problematic conditions persists in real estate market: CMHC

by The Canadian Press26 Jan 2017
Canada's federal housing agency says strong evidence of problematic conditions continues to exist in the national housing market.

Canada Mortgage and Housing Corporation says the most prevalent issues it has observed in the 15 markets it monitors are overbuilding and overvaluation, which occurs when house prices outpace economic fundamentals such as income and population growth.

CMHC first raised its overall risk rating for the national housing market to strong last October.

It said there is strong evidence of problematic conditions in Vancouver, Victoria, Saskatoon, Regina, Toronto and Hamilton.

Edmonton, Calgary, Winnipeg, Montreal and Quebec City show moderate evidence of such conditions, the agency said.

CMHC's 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.

``Price acceleration in Vancouver, Victoria, Toronto and Hamilton indicates that home price growth may be driven by speculation as it is outpacing what economic fundamentals like migration, employment and income can support,'' CMHC's chief economist Bob Dugan said in a news release.

``For this reason, homebuyers should ensure that their purchases are aligned with their needs as well as the long-term market outlook.''


The Canadian Press
 

COMMENTS

  • by Masood Khan MVA, Broker, Re/Max Real Estate Centre 1/26/2017 1:47:58 PM

    To be honest I do not agree with CMHC views, it is a simple formula of supply and demand moreover, this has been created by us, zero percent down, 40 years amortization, HST Rebate are some of the the reasons for the speculation.

    I have been around for over 35 years, a lot of people have quit their $ 50-60,000 jobs to come in Real Estate Sales and people earning smaller salaries are making big money in Real Estate speculation/investments.

    Tarion is not working for the benefit of the home buyers, they are known as an association for the benefit of the builders, most builders do not qualify buyers at the time of sales, they just want to sell to any one with 5% down ... the whole system needs a good review.

  • by Mike Gustus 1/26/2017 2:07:53 PM

    The Government is out of touch with the reality of the market climate in the prairies (Saskatchewan). Prices are not running away, they are in fact declining. What the changes in the insurance requirements is doing is bringing down the standard of living for young families. We have a shortage of jobs, and low unstable resources prices.
    I have been in the industry for 25 years and recognize when I see the market continuing to decline and slow down. I think the government studies are so far behind that they miss the mark most of the time.

  • by djd 1/26/2017 2:22:43 PM

    I have been around the industry for over 40 years. I've lived through a number of market corrections. The most notable was in 1990. Our midtown Toronto house (Yonge and Eglington) corrected by -30%.

    Up until that point, the real estate industry eloquently explained away the mere mention of a correction. They explained rapid price increases on the evolution of Toronto as a 'world class city'. Their position was that those who projected a correction 'just didn't get it'. Interestingly, anyone who could spell real estate was flipping house because it was considered a sure thing. At that time, foreign buyers represented about 30% of our neighborhood ownership. Sound familiar?

    Corrections are a normal part of real estate cycles. They reset price following a period driven largely by greed and excess enthusiasm. A correction is long overdo. Brace for impact.

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