The most influential housing organization in the country seems to be bearish on real estate prices. Canada Mortgage and Housing Corporation (CMHC), the Crown agency in charge of housing research, released its fourth quarter Housing Market Assessment. The government backed agency is seeing prices cool, but still feels the country is overpriced at the national level. They’re probably just jealous of your sweet, sweet condo – right?
The CMHC is the government agency that oversees housing research and mortgage liquidity. They are a non-partisan organization, that provides “unbiased” research. Focusing on fundamentals, and filtering hype is what they do. They’re pretty good at it as well, excluding that report on foreign buyers in Vancouver.
Every quarter they publish a report on how real estate fundamentals are looking. Note, the many times we’ve used the word fundamental. That means interest rates, disposable income, and price acceleration are used for conclusions. Your Realtor saying he saw a WeChat thread that looked exciting is not. They then publish a
terror alert color graded warning system for real estate. Here’s what they had to say about the country’s largest markets.
Toronto Real Estate Is “Highly” Overvalued
Toronto real estate prices have fallen a little, but still remain “overvalued.” The MLS average house price, when adjusted for inflation and disposable income, decreased. The drop however, wasn’t enough to bring prices back to reality. Consequently, the agency has declared the market “highly” overvalued.
Vancouver Real Estate Is “Highly” Vulnerable
The CMHC isn’t super bullish on Vancouver real estate. They noted price growth “significantly” outpaced the growth of incomes. For this reason, they believe the market is highly vulnerable. The good news is they didn’t find any evidence of overbuilding. That conclusion comes after noting low vacancies, and a high rate of pre-sale. That might change next quarter, after they read yesterday’s report on pre-sale absorption.
Montreal Real Estate Is Just Right, But Heating Up Very Quickly
Montreal real estate shows that not all markets across Canada are overpriced. The agency found that prices are moving in-line with demographics and economic activity. Although the recent sharp increase in prices could present a problem in the near future. Despite the recent bump, they declared vulnerability low. Also worth noting Montreal’s prices had been lower than the national average over the past few years. The recent increases are likely making up for lost time.
The Crown Corp thinks Canadian real estate is highly overvalued at a national level. Price growth has started to come down as rates climb, restoring a little sanity. However, the easing isn’t enough to bring prices where they need to be to support a healthy market.
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