{"id":11654,"date":"2019-02-14T10:10:42","date_gmt":"2019-02-14T18:10:42","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=11654"},"modified":"2019-02-11T09:27:00","modified_gmt":"2019-02-11T17:27:00","slug":"cmhc-has-downgraded-its-overvaluation-assessment-for-toronto-victoria","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/02\/cmhc-has-downgraded-its-overvaluation-assessment-for-toronto-victoria\/","title":{"rendered":"CMHC Has Downgraded Its Overvaluation Assessment for Toronto & Victoria"},"content":{"rendered":"

If snarky comments about a Toronto \u201cshack\u201d listed for $2.5 million are any sign, there\u2019s no shortage of Canadians who feel real estate is way overvalued in big cities \u2014 but federal analysts are now showing less concern about out-of-whack home prices, at least in some markets.<\/p>\n

Despite once again flagging the Canadian housing market as showing moderate evidence of overvaluation on the national stage, the Canada Mortgage and Housing Corporation (CMHC) has downgraded its overvaluation assessments for two of the country\u2019s provincial capitals.<\/p>\n

\u201cWe are seeing overvaluation pressures unwinding in Toronto and Victoria, despite the fact that Canada\u2019s overall vulnerability remains high,\u201d says Bob Dugan, CMHC\u2019s chief economist, in a statement.<\/p>\n

This past October, CMHC said both cities were highly vulnerable to overvaluation as of the second quarter of 2018. But looking at the year\u2019s third quarter in its updated Housing Market Assessment, the national housing agency gave the markets a less-severe status of having a \u201cmoderate\u201d degree of vulnerability.<\/p>\n

In Toronto, the gap between actual home prices and CMHC\u2019s estimate for where price levels should be is getting slimmer. In part that\u2019s because employment within the home-hungry young-adult population has increased. Income gains have also kept up with house price movement.
\n\"\"<\/a>
\nChart : CMHC<\/p>\n

Meantime, Victoria is showing similar signs of improvement. \u201cThe population of young adults, which is a key driver of household formation, increased in the third quarter adding support for house price growth,\u201d says Braden Batch, a senior CMHC analyst, also in a statement.<\/p>\n

Overvaluation occurs when home prices become detached from what industry experts typically call fundamentals. For CMHC\u2019s purposes, the fundamentals considered include personal incomes, population growth, and interest rates.<\/p>\n

Each quarter, federal analysts also look for evidence of overheating, price acceleration, and overbuilding, doling out an overall assessment based on findings across all categories.<\/p>\n

There were other signs that the Canadian housing market is going to be facing less risk in the coming quarters. \u201cIt should also be noted that price acceleration may be downgraded in upcoming reports which would lead to Canada\u2019s overall vulnerability moving from high to moderate, provided other [Housing Market Assessment] factors do not change,\u201d says Dugan.<\/p>\n

Concerns About Overvalued Canadian Homes Abating as Job Prospects, Employment Improve<\/a> by Josh Sherman | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"

If snarky comments about a Toronto \u201cshack\u201d listed for $2.5 million are any sign, there\u2019s no shortage of Canadians who feel real estate is way overvalued in big cities \u2014 … [read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-11654","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"\nCMHC Has Downgraded Its Overvaluation Assessment for Toronto & Victoria • Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2019\/02\/cmhc-has-downgraded-its-overvaluation-assessment-for-toronto-victoria\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta 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