Calgary housing market red flagged again in latest CMHC report

Calgary continues to have strong evidence of "problematic conditions" in its real estate market, according to the latest report from the Canada Mortgage Housing Corporation (CMHC).

National rating upgraded from yellow to red, as assessors detect 'strong' evidence of problematic conditions

A house for sale in Calgary. (Robson Fletcher/CBC)

Calgary continues to have "strong evidence of problematic conditions" in its real estate market, according to the latest report from the Canada Mortgage Housing Corporation (CMHC).

The quarterly Housing Market Assessment, released Wednesday, once again gave an overall red flag to Calgary, one of six cities to receive such a designation.

Vancouver, Toronto, Hamilton, Saskatoon and Regina are the others.

The national housing market was also upgraded to the red status in the latest report, up from the previous report's yellow rating, which indicated "moderate" evidence of problematic conditions.

CMHC developed the quarterly assessments in an attempt to to detect risks in housing markets before they potentially lead to major events "such as the house price bubble Toronto experienced in the late 1980s and early 1990s," according to the report.

Calgary's overall red warning was based on the combination of yellow warnings in two areas: overvaluation and overbuilding.

"Moderate evidence of overvaluation was detected due to weaker labour market conditions and slower population growth," the report reads.

"The vacancy rate in October 2015 rose above the problematic threshold, leading to moderate evidence of overbuilding."

A CMHC analyst says Calgary may have seen the worst of it.

"Housing to me has really started to stabilize after declining through most of 2015," Richard Cho said.

CMHC analyst Richard Cho says the Calgary housing market has started to stabilize. (Dave Gilson/CBC)

He says they expect to see more of that stability and modest price growth in the months ahead.

Calgary realtor Doug Hayden says home buyers can still find bargains, but adds that a lot of sellers are still holding pat on prices.

"Calgary's in for a very long term, two to three years, real level market," Hayden told CBC News.

Realtor Doug Hayden says bargains are still around but some sellers are reluctant to drop their price. (Dave Gilson/CBC)

Hayden says he expects housing activity around Calgary to increase next spring.

"It's not prices that are going to pick up, it's going to be the volume that's going to pick up."

Vacancy rates have increased above 5% in Calgary, which is one of the factors the CMHC considered when giving the city's housing market a red flag. (CMHC)

The national housing red flag, by contrast, was issued due to a combination of strong evidence of overvaluation and moderate evidence of price acceleration in the housing market.

That latter has not been a problem in Calgary's market, according to the CMHC.

"Demand for housing has slowed down as low oil prices impacted employment in various sectors," the report reads.

"Population and income growth have also moderated. In addition to weaker demand, supply of housing in the resale and new home markets were up from the previous year, keeping prices from making strong gains."

While potentially problematic price acceleration has been observed in other Canadian housing markets, the same has not been seen in Calgary, according to the CMHC report. (CMHC)