Five Canadian markets continue to have “a high degree of market vulnerability,” according to a new report from the Canada Mortgage and Housing Corporation (CMHC).
The Crown corporation has singled out Victoria, Vancouver, Saskatoon, Hamilton, and Toronto as being in the “red zone” due to overall vulnerability. The assessment was based on categories that included overheating, price acceleration, overvaluation, and overbuilding.
“It’s an early indication of imbalances in the housing market,” said Bob Dugan, chief economist at CMHC, in reference to the red label. “Not a whole lot has changed from the last quarter. For Canada, there is a degree of vulnerability.”
One of the major changes from the previous quarter has been in Edmonton and Calgary, which both scored a “yellow” overall. This signals a moderate degree of market vulnerability, though both cities were in the red when it came to overbuilding.
“There is rising inventory of completed and unsold homes. Vacancy rates in both [Calgary and Edmonton] have been signalling overbuilding for several quarters,” Dugan said.
The Crown corporation’s valuation is part of its quarterly Housing Market Assessment, which aims to alert Canadians to areas of concern in the various housing markets so that they may take reasonable action to promote market stability.