Canada Mortgage and Housing Corporation (CMHC) released its Housing Market Assessment (HMA) report that evaluates the extent to which there is evidence of problematic housing market conditions in 15 Census Metropolitan Areas (CMAs). The HMA points to evidence towards problematic conditions in Toronto, Winnipeg, Saskatoon and Regina.
In Toronto, problematic conditions were evident regarding a combination of price acceleration and overvaluation, while detection of overbuilding was found in Winnipeg, Saskatoon and Regina.
“The most prevalent issue detected in 11 of the 15 centres covered by the HMA is overvaluation,” CMCH Chief Economist Bob Dugan said in the report. “The evidence of overvaluation has increased since the previous assessment in Toronto, Vancouver, Montreal, Edmonton and Saskatoon as price levels are not fully supported by economic and demographic factors. Problematic overvaluation conditions in local housing markets could be resolved by moderation in house prices and/or improving economic conditions.”
By comparison, in the U.S., Quicken Loans has produced reports that show where there are huge gaps between the homeowner’s opinions of what the house is worth and what the appraiser says the value ought to be. The study showed that owners overvalued their homes for eight consecutive months.
The HMA analytical framework is designed to assess housing market conditions by taking into consideration the economic, financial, and demographic drivers of housing markets. The use of multiple indicators of housing conditions, which incorporates various data sources and price measures, provides a robust picture of overall housing market conditions.