Toronto still highly vulnerable as Canada’s housing market improves

After 10 consecutive quarters of high vulnerability, the condition of Canada’s housing market is finally showing some improvement.

In the Canada Mortgage and Housing Corporation’s quarterly Housing Market Assessment, the overall condition of Canada’s housing market moved from high risk to moderate risk, mostly due to an easing of price acceleration. 

The HMA is based on data up to the end of December 2018 and market intelligence up to the end of March 2019.

In Toronto, the market was at moderate risk of overvaluation, overheating, and price acceleration. The only thing Toronto is not in danger of doing is overbuilding. The moderate risk of three out of four risk factors are enough to give the city an overall high risk rating. 

CMHC says average resale prices in Toronto are easing and pricing is falling in line with market fundamentals, like population and household income. This is good news! Hamilton was rated similarly across the board.

The only other markets in Canada at high risk are Victoria and Vancouver, also due to moderate risks of overheating, price acceleration, and overvaluation. These two markets are at low risk of overbuilding. 

The Canadian housing markets at moderate risk include Edmonton, Calgary, Saskatoon, Regina, and Winnipeg, all of which are showing moderate risk of overbuilding (Regina’s at a high risk of overbuilding). Winnipeg is also at moderate risk of overvaluation. 

The low risk markets include Ottawa, Montreal, Quebec, Moncton, and St. John’s. Montreal and Moncton are showing signs of overheating, and St. John’s is on the edge of overbuilding. 

We’re interested to see how CMHC’s HMA ratings are affected by the federal government's 2019 Budget and Ontario’s Housing Supply Action Plan! 

CMHC definitions of problematic conditions: