After a lengthy period of high vulnerability in Toronto’s housing market, it finally looks like things are starting to ease up, according to the Canada Mortgage and Housing Corporation’s latest Housing Market Assessment.
On a national level, market vulnerability has been “moderate” for the last three quarters, following 10 consecutive quarters of high vulnerability. CMHC says that imbalances between prices and market fundamentals like income and population growth have started leveling out.
"Although moderate evidence of overvaluation is still signaled at the national level, the imbalances between home prices and housing market fundamentals are easing,” says Bob Dugan, Chief Economist, CMHC. “In the second quarter of 2019, the inflation-adjusted MLS® average price in Canada declined for a sixth consecutive quarter on a year-over-year basis, while fundamentals such as the pool of potential homebuyers is steadily growing, increasing housing demand."
Toronto and Hamilton went from high vulnerability to moderate as the risk of overvaluation eased. Both markets are still at moderate risk of overheating and price acceleration. Victoria is the only market still highly vulnerable due to moderate price acceleration and overvaluation.
The other markets at moderate risk include Vancouver, Edmonton, Calgary, Saskatoon, Regina, and Winnipeg, mostly due to overbuilding, except in Vancouver, which is at moderate risk of overvaluation.
All other markets, including Ottawa, Montreal, Quebec, Moncton, Halifax, and St. John’s are all at low risk. Montreal and Moncton are showing some signs of overheating, and St. John’s is on the cusp of overbuilding, but it’s not enough to push these markets into a level of moderate vulnerability.
With news that Toronto’s housing market is calming down, plus the new condo market performing well, and new single-family home sales picking up steam, it looks like 2019 is going to end on a good note. We’re eager to see what 2020 holds!