Canada’s housing agency says while there are some signs of improvement, the national real estate market is still displaying ‘problematic conditions’ as a whole.
Canada Mortgage and Housing Corporation said in its quarterly housing forecast on Tuesday that the national housing market is still showing “strong evidence of problematic conditions,” the same state it was in back in January when the agency put out its last report on the matter.
‘While the overall assessment for Canada has not changed from the previous quarter, the level of overvaluation has been downgraded to moderate,” CMHC chief economist Bob Dugan said. “Eastern markets show weak evidence of overvaluation while this factor is stronger in western centres and markets in southern Ontario where economic fundamentals have not kept pace with recent price growth.”
The CMHCÂ examines four aspects of Canada’s various housing markets in coming up with its assessment, considering the level ofÂ overbuilding, overheating, overvaluationÂ and price acceleration. It then grades each market on a colour coded green, yellow and red score based on if it sees the risk for that factor as being weak, moderate, or strong.
While there’s a lot of green in most categories, the “overvaluation” factor shows a lot of yellow and red, which explains the red alert overall.
Despite the overall score of red, the agency says conditions have improved in a lot of local markets in a lot of ways. “Conditions have improved in Regina, MontrÃ©al and QuÃ©bec relative to home prices,” the CMHC said.
Overbuilding and overvaluation are now only detected in six markets across the county. In January, there were eight.
“In Moncton and St John’s,” the CMHC said,Â “the supply of homes is adjusting to the demand.”
On the flip side, “Toronto and Hamilton continue to face price acceleration, overvaluation and overheating,” the agencyÂ said. “Price growth has intensified and demand is outpacing supply in the rental, resale and new home markets.”