Canadian housing markets overvalued: CMHC

Low risk of overheating, price acceleration or overbuilding

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(Getty Images)

(Getty Images)

OTTAWA – The Canada Mortgage and Housing Corp. says there is a modest amount of overvaluation in the country’s housing markets, however other risk factors such was overheating, price acceleration, and overbuilding are not present.

In its house price analysis and assessment, CMHC says, overall, housing markets in Canada are broadly consistent with underlying demographic and economic factors such as employment and interest rates.

CMHC chief economist Bob Dugan says the risk of overvaluation is most evident in Montreal and Quebec, but added that the trend is improving.

He said a modest risk of overvaluation is also present in Toronto, Calgary and Halifax.

However, CMHC did not point to Vancouver, one of the country’s hottest real estate markets as being at a risk of overvaluation.

CMHC says home prices in Vancouver are supported by local growth in personal disposable income and long-term population growth.

One comment on “Canadian housing markets overvalued: CMHC

  1. CMHC not pointing to Vancouver as overvalued tells you they didn’t have much clue what they were doing. Vancouver’s been measured as the second-least affordable housing in the world, behind Hong Kong, measured as median housing prices divided by median income. Houses in Vancouver cost more than 10 times median income. Three times median income is considered affordable. They say overvaluation is most evident in Montreal and Quebec. In April 2014, Montreal’s average house price was $326k. Vancouver’s was $801k. Montreal’s median household income is $71k. Vancouver’s was $71k too. So households in Montreal and Vancouver make the same, but Vancouver’s housing cost more than twice as much and they figure Montreal is overvalued but Vancouver isn’t. Talk about nonsense.

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