OTTAWA, Ontario – The Canadian housing market has moved to a “high degree of vulnerability,” precipitated by pricing and valuation imbalances that are intensifying in Eastern Canada and continuing to persist in Ontario, according to the Canadian Mortgage and Housing Corporation (CMHC).  

The CMHC’s latest snapshots of economic and housing market conditions for Canada and 14 census metropolitan areas are contained in its Housing Market Assessment for the second quarter of 2021.
 

Key highlights of the report include: 

• The Canadian housing market has moved from a moderate to a high degree of vulnerability. The change was prompted by the detection of price acceleration alongside persistent overvaluation imbalances.
• High vulnerability at the national level is largely a reflection of intensified and persistent imbalances in several local housing markets across Ontario and Eastern Canada.
• Montréal's housing market has moved to a high degree of vulnerability due to the detection of overvaluation imbalances. In Vancouver, it has moved to a low degree of vulnerability and in Toronto, it remains at a high degree.

CMHC said the HMA identifies significant imbalances in the housing market that could increase the risk and consequences of a housing market downturn. 

The HMA framework looks at the state of the housing market vulnerability, by assessing potential imbalances using four key factors:

• Overheating -- when demand significantly outpaces supply.   
• Price acceleration -- when house prices rise at an increasing pace over a sustained period.     
• Overvaluation -- when house prices differ significantly from their level consistent with housing market fundamentals (such as labour income, population and interest rates).
• Excess inventories -- when there is an unusually high level of vacant housing units.

Download the report.