CMHC maintains red alert on Canadian housing, but notes signs of improvement

Canada's housing agency says while there are some signs of improvement, the national market is still displaying 'problematic conditions.'

Overvaluation still a problem despite improvements elsewhere

While the CMHC says there's strong evidence of problematic conditions overall in Canada's housing market, many local markets are in fine shape. (Jamie Rector/Bloomberg)

Canada's housing agency says while there are some signs of improvement, the national real estate market is still displaying 'problematic conditions' as a whole.

Canada Mortgage and Housing Corporation said in its quarterly housing forecast on Tuesday that the national housing market is still showing "strong evidence of problematic conditions," the same state it was in back in January when the agency put out its last report on the matter.

'While the overall assessment for Canada has not changed from the previous quarter, the level of overvaluation has been downgraded to moderate," CMHC chief economist Bob Dugan said. "Eastern markets show weak evidence of overvaluation while this factor is stronger in western centres and markets in southern Ontario where economic fundamentals have not kept pace with recent price growth."

The CMHC examines four aspects of Canada's various housing markets in coming up with its assessment, considering the level of overbuilding, overheating, overvaluation and price acceleration. It then grades each market on a colour coded green, yellow and red score based on if it sees the risk for that factor as being weak, moderate, or strong.

While there's a lot of green in most categories, the "overvaluation" factor shows a lot of yellow and red, which explains the red alert overall.

Despite the overall score of red, the agency says conditions have improved in a lot of local markets in a lot of ways. "Conditions have improved in Regina, Montréal and Québec relative to home prices," the CMHC said.

Overbuilding and overvaluation are now only detected in six markets across the county. In January, there were eight.

"In Moncton and St John's," the CMHC said, "the supply of homes is adjusting to the demand."

On the flip side, "Toronto and Hamilton continue to face price acceleration, overvaluation and overheating," the agency said. "Price growth has intensified and demand is outpacing supply in the rental, resale and new home markets."


To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

Become a CBC Member

Join the conversationCreate account

Already have an account?