Metro Vancouver housing market no longer ‘vulnerable’ but Victoria still at risk: CMHC

First time in three years that Vancouver market has not been rated at high vulnerability by federal housing agency

Western Investor
August 1, 2019

Photo: Dan Toulgoet

Metro Vancouver’s housing market has received a “moderate degree of vulnerability” rating, after three years of “high degree of vulnerability” ratings, from the Canada Mortgage and Housing Corp. (CMHC).

CMHC’s HMA examines urban real estate markets across Canada, assessing a combination of four key risk factors: overvaluation of house prices in comparison with levels that can be supported by economic fundamentals; overheating, when demand for homes in the region outpaces supply; sustained acceleration in house prices; and overbuilding, when the inventory of available homes exceeds demand.

In its quarterly Housing Market Assessment (HMA), issued August 1 and examining the market in 2019’s second quarter, the federal housing agency said that price acceleration had eased sufficiently to downgrade the Vancouver real estate market’s risk assessment. The only factor that remained at moderate risk was overvaluation of real estate, said the CMHC, while the other three factors were all at low risk.

Eric Bond, senior specialist, Market Analysis at CMHC, said of the Vancouver market, “While home price growth over the past few years significantly outpaced levels supported by fundamentals, these imbalances have narrowed through growth in fundamentals and lower home prices in different segments of the resale market.”

However, Greater Victoria – along with Toronto and Hamilton, Ontario – remained at high risk, according to the CMHC. Victoria’s market still showed moderate risk of overvaluation, price acceleration and overheating, said the agency, but these are showing signs of easing. “The decline in price and growth in fundamentals have helped to narrow the average estimate of overvaluation in Victoria,” wrote the report authors.

CMHC Vancouver Victoria HMA with legend August 2019
Source: CMHC

Canada’s housing market as a whole was given a “moderate degree of vulnerability” rating, but the report authors acknowledge that “regional disparities exist.”

Joannah Connolly is editorial director of Glacier Media Real Estate, Glacier Media's real estate division. Joannah writes and curates real estate news for Glacier Media's local newspaper websites, including the Vancouver Courier, Times Colonist, Prince George Citizen, North Shore News, Burnaby Now, Tri-City News and others. She also writes and oversees editorial content in Real Estate Weekly Homes, West Coast Condos & Homes, Western Investor and Glacier's special real estate publications. A dual Canadian-British citizen, Joannah has 23 years of journalism and editing experience in Vancouver and London, with a background in construction, architecture, healthcare and business media. Joannah has appeared on major local TV outlets as a real estate commentator, has moderated and spoken on various industry panels, and spent two years hosting the Real Estate Therapist talk radio show on Vancouver's Roundhouse Radio.
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