Both Regina and Saskatoon housing markets are showing “strong evidence of problematic conditions,” along with Vancouver, Toronto and Calgary, the report said Wednesday.
What: The HMA serves as an early warning system, alerting consumers to areas of concern developing in Canadian housing markets, the federal Crown corporation said. CMHC defines problematic conditions as imbalances in the housing market, such as overbuilding, overvaluation, and price acceleration, that depart significantly from historical averages.
What’s up, what’s down: Overall evidence of problematic conditions has increased since the previous assessment nationally, particularly in Vancouver, the report said. “In Vancouver, we now have sufficient evidence to raise our overall assessment of problematic conditions in the Vancouver housing market to high,” CMHC said.
Strong evidence of problematic conditions is seen in Vancouver, Toronto, Calgary, Saskatoon and Regina. In Toronto and Vancouver, this is due to price acceleration and overvaluation, while in Calgary, Saskatoon and Regina, it’s caused by overvaluation and overbuilding.
Moderate evidence of problematic conditions is seen nationally, as well as in Edmonton, Winnipeg, Hamilton, Montreal, and Quebec. Evidence of overvaluation has increased since the previous assessment nationally and in Hamilton. Overall evidence of problematic conditions has decreased in Ottawa since the previous assessment, the report said.
What it means: “For Canada overall, we now detect strong evidence of overvaluation,” said Bob Dugan, CMHC’s chief economist. “As a result, our overall assessment has moved from weak to moderate since the last report. Moreover, the greater range of evidence of problematic conditions in Vancouver has led us to conclude that there is now strong evidence of problematic conditions in our overall assessment of the Vancouver housing market.”
But Gord Archibald, CEO of the Association of Regina Realtors, noted that Regina is the only market deemed to be at “high risk” or having “problematic conditions” in every HMA report CMHC has issued. “We’re in the same classification along with Vancouver and Toronto, which is difficult to fathom,” Archibald said.
“We’re concerned that the report does not accurately represent what’s happening in the market,” he said, adding that home sales are similar to recent years, inventory levels are coming down and prices have increased only marginally since the beginning of the year.
“It’s very perplexing.”
Regina housing market assessment
• After several quarters of declines, house prices in Regina stabilized in the first quarter of 2016 with the reduction in resale supply, CMHC said.
• Given slower growth in fundamentals, such as personal disposable income and young adult population, the HMA continued to detect moderate evidence of overvaluation.
• In addition, elevated inventory of new housing units (especially condominium apartments) relative to population, and a higher rental vacancy rate continued to reflect strong evidence of overbuilding.