Canada

Canada’s National Housing Agency Thinks Toronto Is No Longer Overvalued

What housing affordability crisis? The latest Canada Mortgage and Housing Corporation (CMHC) Housing Market Assessment shows real estate is at a “moderate” level of risk. The ratings, were largely unchanged, but did include one surprise. Toronto and Hamilton, previously at high vulnerability, received downgrades to their risk. Generally, more risk is seen in real estate markets west of Ottawa. From Ottawa, heading east, all major markets are still in the clear, according to the agency.

The Housing Market Assessment

The Housing Market Assessment is a color coded (read: simplified) look at real estate.  The CMHC rates fundamentals using just three levels – low (green), medium (yellow), and high (red). Overheating and price acceleration only rank low or moderate. That is, overheating and price acceleration only exists, or it doesn’t. It’s totally binary, and there’s no degree. Besides those two, the rest of the market ranks in degrees of vulnerability.

Canadian Real Estate Is Moderately Vulnerable

Canadian real estate is displaying moderate signs of vulnerability in the latest report. The report for 2019 Q4 shows it holding the same moderate rank as last year. This follows ten quarters of a red, or “high,” degree of vulnerability. Overvaluation is the only key issue the housing agency readily sees in its models.

Canada’s National Housing Agency Thinks Toronto Is No Longer Overvalued - chart
Source: CMHC.

Toronto Real Estate Is Moderately Vulnerable

Toronto real estate has a “moderate” vulnerability rating – an improvement from high. Market activity is improving, there’s still overheating, and prices are accelerating. Overvaluation is easing though. Kind of silly, since they’re looking at the market from an aggregate perspective. Detached home prices increased just a few notches above inflation. However, condo prices increased nearly a whole year of wages for the median person in Toronto.

Vancouver Real Estate Is Moderately Vulnerable

Vancouver real estate maintained it’s “moderate” vulnerability rating. The market is overvalued, but the agency isn’t seeing overheating. Price acceleration has been low over the past year, because it’s been negative. Worth a mention that sales volumes have returned, and those negatives are shrinking.

Montreal Real Estate Has Low Levels of Vulnerability

Montreal, a hot market for investors recently, is demonstrating low levels of vulnerability. The agency notes that home prices are consistent with economic and demographic fundamentals. They also note the resale market is beginning to show signs of overheating. So far, it hasn’t registered on the color coded model yet.

Not a lot’s changed, except for the downgrades to Toronto and Hamilton real estate. Both markets continue to “overheating,” but somehow don’t show overvaluation. Major cities west of Ottawa continues to show moderate signs of vulnerability. Ottawa and East, continue to display few signs of vulnerability.

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13 Comments

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  • Jeff 2 weeks ago

    The same CMHC that said Vancouver only had 1% foreign buyers? Ok Boomers.

  • ContrarianBruce 2 weeks ago

    What in the actual…. So let me make sure Im not dreaming:
    1. Prices have not corrected.
    2. Incomes have not increased.
    3. Debt has not decreased.
    4. Dependence on real estate has intensified.
    5. Foreign capital influx has been decreased.
    6. I think I can do this way into my lunch hour but seriously all we need is Torontonians to go into more debt on all lending fronts, bolster up volumes and prices and we are out of the rough? Pfft.

  • JimmyJamJack 2 weeks ago

    Hmmm, IMF says Toronto is 50% overvalued relative to local incomes and UBS says it’s the second biggest housing bubble in the world but CMHC is like “nothing to worry about…would you like some mortgage insurance with your burger?”

    It almost feels like CMHC is getting political arm twisting to push positive sentiments about the housing market post election, maybe to keep this gravey train going…meanwhile 47% of Canadians are $200 away from insolvency…

  • MH 2 weeks ago

    When you read in history books about the elites blowing everything up neglecting the multitude of opportunities to avoid the clusterf*ck, you think sometimes – how could they have possibly been so recklessly, so self-destructively stupid? Well, that’s how…

  • Canaduh 1 week ago

    Troubled statistics
    But markets booming they said
    Regrets for years, years.

  • Gen Z 1 week ago

    Average rent for a 1-bedroom apartment in Scarborough went from $900 to $1,950 from 2015 to 2019, but Boomer tells us that “housing is cheap” so that we would be in a rush to buy his termite infested and mildew bungalow that his ancestors got for six months wages working as a janitor, or worse, stealing land from the Indigenous?

    Ok Boomer.

  • Don Carlos 1 week ago

    I don’t trust anything CMHC says. If Toronto’s land registry had open data we would see the scams in real time. We have investors washing money in Toronto preconstruction condos.ca market and nobody is the wiser. Our goverment sold the land registry to a private corporation TERANET and they preventing any sort of analysis from happening with crazy high data fees. $24 to look up one sale with data that should be public record in any first world country.

  • Jupiter 1 week ago

    At any other financial organization making such false report would get you fined. Looks like CMHC needs a wake up call. People will riot on the streets soon, look at Frence and HongKong.

    They need to bring housing prices down to what it was 5 years ago. There won’t be much people affected and it will save our economic viability for the long run. We will turn into Japan soon with even longer lost decades because we don’t have any tech industry. You can’t develop any kind of tech industry with high housing cost. Successful tech industry may lead to high housing prices not the other way around.

    lower real estate price now, people with options will leave.

    • John 1 week ago

      If you were reading this site 5 years ago you would know that it was saying prices were too high and that would should wait for them to come down lol

      • Canaduh 1 week ago

        A bubble starts small
        Then grows big until it pops
        Best keep your distance

      • Mortgage Guy 1 week ago

        Does lying make you feel more important about your opinion? The site hasn’t been around 5 years ago. I remember when it started 3 years ago. I’ve been emailing my clients their articles ever since.

        If you bought in Vancouver a year later, you would have lost money. If you bought in Toronto one year later, you would have lost money. I don’t believe they’ve ever discouraged someone from buying a house, but according to your argument, if they started saying things were overvalued when they started, they were absolutely correct.

        The one exception is condo prices, but if you’re old enough to have bought a condo in the late 80s, you already know how this ends. If you work in real estate and you’re playing this card with your clients, you should understand this is going to do long-term damage to your reputation, with just a small short-term gain.

  • John Alexander 1 week ago

    Does the cmhc know or understand the import of the immense rage brewing even among older millennials who have been locked out of the market? It seems like there’s acceptance now that all young persons not granted enormous cash gifts are just going to be sacrificed to credit-worthy oldsters who can rent them shoeboxes. I guess that’s just the way we’ve built our economy. Want any sense of stability? Great, just be born in the 1950s and own/inherit real estate. Want to be screwed beyond reason? Be a single-income professional born after 1979.

    • SH 6 days ago

      True, but it was primarily people born after 1979 who just reelected the federal Liberals so that they can maintain the explosively high mass immigration which displaces Canadians in their own cities and drives down their wages. In a sense Millennials are doing it to themselves by voting for globalists who don’t really care about the country and its citizens (and I’m born 1980, so I’m either one of the youngeset Xers or eldest Millennials).

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