CMHC calls Halifax housing market 'highly vulnerable'
More people moving into area than moving out
The Halifax housing market is "highly vulnerable" right now, say analysts with the Canada Mortgage and Housing Corporation.
They say three market conditions are raising red flags — overheating, price acceleration and overvaluation.
"For overvaluation, we are kind of signalling there that observed house prices are higher than what housing market fundamentals would otherwise indicate," senior economics analyst Kelvin Ndoro said Thursday.
He said part of the problem is that there are more people moving to Nova Scotia from places like Ontario than there are people leaving the province for opportunities elsewhere.
Ndoro said many of the new arrivals are coming from overheated housing markets like Toronto where they've sold a home for a price that gives them more disposable income to spend on a home here.
Trend started before pandemic
He said the trend of more people moving to Nova Scotia than are moving away started before the pandemic but could have accelerated with Nova Scotia's relatively strong performance in the COVID fight.
"So maybe COVID-19 might have exacerbated that transition from people moving from other provinces to Nova Scotia, but it's a trend that we've been seeing for a few years."
Ndoro said price acceleration means housing prices have been climbing at a very high rate, along with the total volume of housing sales. In the last quarter of 2020, sales were up over 42 per cent over the same period the year before.
He said one of the dangers with the current conditions is that people could find themselves saddled with mortgages that cost more than the latest value for their home if there is a market correction.