CMHC keeps red flag on Canada’s housing market

CMHC is not removing the red flag it raised three months ago for the country’s housing market, saying t still sees strong overall evidence of problematic market conditions.
The federal agency said on Thursday it has kept the rating for a second consecutive quarter due to overvaluation and price acceleration in the housing markets.

“Price acceleration in Vancouver, Victoria, Toronto and Hamilton indicates that home price growth may be driven by speculation as it is outpacing what economic fundamentals like migration, employment and income can support,” said Bob Dugan, the agency’s chief economist.

“Home buyers should ensure that their purchases are aligned with their needs as well as the long-term market outlook,” he said.

CMHC said once Ontario and its red hot Greater Toronto Area Market was removed, house prices remained flat throughout the period even though prices rose 7% on a year over year basis at the end f 2016’s third quarter.
CMHC said there is evidence problematic conditions have decreased in Calgary since the previous assessment as some housing markets in oil dependent centres are now rebalancing. Meanwhile Victoria shows strong evidence of problematic conditions.

Conditions in the other 13 markets included in the quarterly survey remained unchanged.
Last week, CMHC said it will charge borrowers a few dollars more every month to insure their mortgages, starting March 17.