CMHC points to a moderate level of vulnerability for Canada’s housing market

Canada Mortgage and Housing Corporation (CMHC) released its new Housing Market Assessment for the third quarter of this year.

“While the unprecedented government support provided certain temporary relief, the COVID-19 crisis negatively influenced the level of permanent disposable income for households,” – noted Bob Dugan, CMHC’s chief economist. “In addition to weaker drivers of the real estate market, overvaluation imbalances increased or began to appear in several markets during the third quarter of 2020.”

However, when assessing the level of vulnerability in Canada’s main housing markets, CMHC determined that the strong sales activity of Q3 (even without the support of stable employment, immigration, or economic certainty) has had a minimal influence on the stability of the national real estate markets. Compared to CMHC’s second quarter report, only four Census Metropolitan Areas are now considered more vulnerable than in September: Regina, Hamilton, Montreal, and Moncton.

CMHC’s assessment is based on four factors: overbuilding, overvaluation, price growth, and overheating.

Moderate risk from overheating was reported in: Hamilton, Ottawa, Montreal, Quebec City, Moncton

Moderate risk from price growth was reported in: Hamilton, Ottawa, Montreal, Moncton

Moderate risk from overvaluation was reported in: Canada, Victoria, Regina, Hamilton, Halifax

High risk from overvaluation was reported in: Moncton

Moderate risk from overbuilding was reported in: Edmonton, Calgary, Regina