{"id":6569,"date":"2017-08-02T10:10:11","date_gmt":"2017-08-02T17:10:11","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=6569"},"modified":"2017-07-27T20:41:25","modified_gmt":"2017-07-28T03:41:25","slug":"stability-of-vancouver-victorias-housing-markets-continue-to-raise-red-flags","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2017\/08\/stability-of-vancouver-victorias-housing-markets-continue-to-raise-red-flags\/","title":{"rendered":"Stability of Vancouver &#038; Victoria&#8217;s Housing Markets Continue to Raise Red Flags"},"content":{"rendered":"<p style=\"text-align: justify;\">Lacking enough supply to meet demand, Vancouver and Victoria\u2019s housing markets both showed signs of problematic conditions last quarter, according to the Canada Mortgage and Housing Corporation (CMHC)\u2019s latest quarterly assessment.<\/p>\n<p style=\"text-align: justify;\">During that period, both housing markets saw home prices grow persistently \u2014 well above levels justified by fundamentals, such as employment and immigration.<\/p>\n<p style=\"text-align: justify;\">In all, CMHC\u2019s most recent Housing Market Assessment tracks 15 Census Metropolitan Areas and determines whether they display weak (green), moderate (yellow) or strong (red) evidence of problematic conditions.<\/p>\n<p style=\"text-align: justify;\">The assessment, which gauges vulnerabilities to each CMA market\u2019s \u201cstability,\u201d examines four factors: overheating, house price acceleration, overvaluation and overbuilding.<\/p>\n<p style=\"text-align: justify;\">Last quarter, Vancouver and Victoria\u2019s overall market conditions signaled red flags for problematic conditions just as they did in the previous quarter.<\/p>\n<p style=\"text-align: justify;\">Even though home price growth in Vancouver has eased so far this year compared to record appreciation in 2016, the market still showed moderate evidence of price acceleration, CMHC found.<\/p>\n<p style=\"text-align: justify;\">A continual escalation in prices has contributed to signs of overvaluation in the market.<\/p>\n<p style=\"text-align: justify;\">According to CMHC, overvaluation occurs when home prices aren\u2019t justified by underlying drivers of housing markets, such as income, population and actual and expected financing costs.<\/p>\n<p style=\"text-align: justify;\">Despite record housing starts in Q2 2017, competition for affordable housing continued in Vancouver resulting in a supply crunch.<\/p>\n<p style=\"text-align: justify;\">\u201cTownhomes and apartments, which typically sell for less than single-detached homes, were in high demand for first-time buyers and families,\u201d says Eric Bond, CMHC\u2019s principal market analyst for Vancouver, in a statement.<\/p>\n<p style=\"text-align: justify;\">\u201cThis led to multiple-offer situations, increasing prices and moderate evidence of overheating for Vancouver,\u201d he adds.<\/p>\n<p style=\"text-align: justify;\">Overbuilding in Vancouver was the only part of CMHC\u2019s most recent assessment that indicated there was minimal evidence of problematic conditions.<\/p>\n<p style=\"text-align: justify;\">With tight housing supply and a bottoming rental market vacancy rate the city is currently struggling to meet demand.<\/p>\n<p style=\"text-align: justify;\">And Vancouver isn\u2019t the only city in BC to face these challenges. Victoria saw similar signs of market troubles last quarter as well.<\/p>\n<p style=\"text-align: justify;\">For the third consecutive quarter, Victoria\u2019s market has drawn red flags from the CMHC as significant supply-demand imbalances continue to play out.<\/p>\n<p style=\"text-align: justify;\">Housing supply in Victoria did not keep pace with demand as the existing market saw a drop in listings.<\/p>\n<p style=\"text-align: justify;\">That pushed home prices higher last quarter, suggesting strong evidence of overvaluation and moderate signs of problematic price acceleration.<\/p>\n<p style=\"text-align: justify;\">In response to low inventories and low rental vacancy rates in Victoria\u2019s new-home market, builders have been breaking ground for more dwellings.<\/p>\n<p style=\"text-align: justify;\">However, overvaluation and price acceleration could continue if new listings in the resale market don\u2019t return to healthier levels.<\/p>\n<p><a href=\"http:\/\/news.buzzbuzzhome.com\/2017\/07\/cmhc-raised-red-flags-vancouver-victorias-housing-markets.html\" target=\"_blank\" rel=\"noopener\">CMHC : Stability of Vancouver &amp; Victoria&#8217;s Housing Markets Continue to Raise Red Flags<\/a> by Kerrisa Wilson | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Lacking enough supply to meet demand, Vancouver and Victoria\u2019s housing markets both showed signs of problematic conditions last quarter, according to the Canada Mortgage and Housing Corporation (CMHC)\u2019s latest quarterly &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2017\/08\/stability-of-vancouver-victorias-housing-markets-continue-to-raise-red-flags\/\">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-6569","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>Stability of Vancouver &amp; 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