It's not just Toronto and Vancouver.

Most of Canada's housing markets are currently overvalued, according to the latest quarterly market assessment from the Canada Mortgage and Housing Corporation (CMHC) .

Saying it has found "strong evidence of problematic conditions," for the country as a whole, CMHC singled out nine of the country's 15 biggest housing markets as being particularly overvalued.

"Home prices have risen ahead of economic fundamentals such as personal disposable income and population growth, resulting in overvaluation in many Canadian housing markets," the CMHC said.

While waving the red flag about overvaluation, the agency was quick to stress that doesn't necessarily mean that prices are bound to fall, quickly or steeply.

"Growth in house prices will slow and housing starts are expected to moderate in 2017 and 2018," chief economist Bob Dugan said.

The average price for homes sold on the Canadian Real Estate Association's MLS system is forecast to be between $473,400 and $495,000 this year. In 2017, the CMHC expects that to be between $483,600 and $507,800, and from $497,700 to $525,100 in 2018. "We don't think the imbalances we have now are anywhere near the kind of imbalances that existed in the U.S. prior to the financial crisis," Dugan said in an interview.

The average Canadian home was worth just under $475,000 last month, CREA said recently.

The CMHC uses a green, yellow and red system to gauge markets along different metrics, including overbuilding, overvaluation and price acceleration. Green represents weak evidence, yellow is moderate, and red is strong evidence of that category.

Four cities were given a red flag for overvaluation:

Toronto.

Vancouver.

Hamilton.

Quebec City.

Five more were given a yellow warning on the overvaluation front:

Edmonton.

Calgary.

Saskatoon.

Regina.

Montreal.

It's the first time the agency has raised its assessment of the overall market to red. In July, the agency was waving a yellow flag.

Big markets in Toronto and Vancouver get a lot of attention, as prices in those cities have risen rapidly in recent years. Those hot markets are spreading to nearby cities too, the CMHC said.

"Price growth remains elevated in Vancouver and continues to strengthen in Victoria, Abbotsford, and Kelowna," the housing agency said of the Vancouver area. The same thing is happening in cities adjacent to Toronto, the CMHC said.

Impact of mortgage rule changes

The agency's report also looked at the impact of recent changes to mortgage rules that will see all borrowers of insured mortgage on five-year terms be "stress-tested" at a borrowing rate much higher than the one they are approved for.

While it's hard to gauge the impact of such a move, the CMHC estimates that "5 to 10 per cent of all prospective home buyers could be affected during the first year but the precise impact will vary depending on specific homebuyer circumstances and behaviours."