{"id":12504,"date":"2019-05-14T10:10:50","date_gmt":"2019-05-14T17:10:50","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=12504"},"modified":"2019-05-03T09:50:25","modified_gmt":"2019-05-03T16:50:25","slug":"the-canadian-housing-market-is-now-showing-a-moderate-degree-of-vulnerability","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/05\/the-canadian-housing-market-is-now-showing-a-moderate-degree-of-vulnerability\/","title":{"rendered":"The Canadian Housing Market is Now Showing a &#8220;Moderate&#8221; Degree of Vulnerability"},"content":{"rendered":"<p style=\"text-align: justify;\">Anyone banking on a Canadian housing crash might be out of luck, as the odds of a collapse haven\u2019t been this low in years.<\/p>\n<p style=\"text-align: justify;\">So suggest two newly published reports, which arrived not long after The Big Short investor Steve Eisman \u2014 who became the stuff of legend for predicting the 2008 Financial Crisis \u2014 made his next big bet against the market.<\/p>\n<p style=\"text-align: justify;\">In the Canada Mortgage and Housing Corporation\u2019s latest Housing Market Assessment, the Crown corporation downgraded its risk evaluation for the national market.<\/p>\n<p style=\"text-align: justify;\">According to CMHC, the market is now showing a \u201cmoderate\u201d degree of vulnerability. That\u2019s good news when compared to its February evaluation, which maintained risk was running \u201chigh.\u201d<\/p>\n<p style=\"text-align: justify;\">\u201cAfter ten quarters, the state of the national housing market has improved to moderate vulnerability,\u201d says Bob Dugan, CMHC\u2019s chief economist, in a statement.<\/p>\n<p style=\"text-align: justify;\">\u201cEven though moderate evidence of overvaluation continues for Canada as a whole, there has been improved alignment overall between house prices and housing market fundamentals in 2018 in comparison to the previous year,\u201d Dugan adds.<\/p>\n<p style=\"text-align: justify;\">Canadian home prices are cooling, and that coupled with \u201clow\u201d evidence of overbuilding and overheating explains CMHC\u2019s rosier outlook.<\/p>\n<p style=\"text-align: justify;\">In a separate report also out this week, RBC notes how lower interest rates are reducing risks.<\/p>\n<p style=\"text-align: justify;\">\u201cA downward revision to our outlook for interest rates is reducing already-low odds of a steep and widespread housing downturn over the next 12 months in Canada,\u201d reads RBC\u2019s latest Canadian Housing Health Check.<\/p>\n<p style=\"text-align: justify;\">Last year, the market consensus was that the Bank of Canada was going to continue on its path of gradually hiking its policy rate, which influences the mortgage market.<\/p>\n<p style=\"text-align: justify;\">Between the summer of 2017 and October 2018, the central bank had, after all, hiked the policy rate a total of five times bringing it to 1.75 percent.<\/p>\n<p style=\"text-align: justify;\">But the economy has since sputtered, and many expect the central bank to stand on the sidelines for the rest of the year \u2014 with a minority even calling for a rate cut.<\/p>\n<p style=\"text-align: justify;\">That doesn\u2019t mean the forecast is clear, though. According to RBC\u2019s health check, affordability is in the red, meaning it\u2019s \u201csignificantly outside historical norms and posing a much higher risk than usual.\u201d<\/p>\n<p style=\"text-align: justify;\">\u201cThe high cost of homeownership in Vancouver, Toronto and, increasingly, Montreal are a top vulnerability for Canada\u2019s major markets,\u201d RBC notes.<\/p>\n<p style=\"text-align: justify;\">A more widespread issue is the overbuilding of multi-family homes, which include condos as well as rental units.<\/p>\n<p style=\"text-align: justify;\">\u201cElevated levels of apartment construction in Vancouver, Toronto and Montreal raise some potential longer-term absorption issues,\u201d reads the report.<\/p>\n<p style=\"text-align: justify;\">Before bears like Eisman get too excited: \u201cThere\u2019s little risk near term, however, as unsold inventories are low at the present time,\u201d RBC adds.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.livabl.com\/2019\/05\/odds-canadian-housing-crash-lowest.html\" target=\"_blank\" rel=\"noopener noreferrer\">Odds of A Canadian Housing Crash are Now The Lowest in Years<\/a> by Josh Sherman | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Anyone banking on a Canadian housing crash might be out of luck, as the odds of a collapse haven\u2019t been this low in years. So suggest two newly published reports, &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2019\/05\/the-canadian-housing-market-is-now-showing-a-moderate-degree-of-vulnerability\/\">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-12504","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Canadian Housing Market is Now Showing a &quot;Moderate&quot; Degree of Vulnerability &#8226; 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\/05\/the-canadian-housing-market-is-now-showing-a-moderate-degree-of-vulnerability\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"The Canadian Housing Market is Now Showing a &quot;Moderate&quot; Degree of Vulnerability &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Anyone banking on a Canadian housing crash might be out of luck, as the odds of a collapse haven\u2019t been this low in years. 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