Canadian real estate markets are cooling everywhere west of Ottawa. That had little impact on the latest report from the Canada Mortgage and Housing Corporation (CMHC). The Government backed agency believes the national real estate market is highly vulnerable. They did note improvements in the largest markets, but it’s going to be a while before they’re fixed.

The Who, Said What?

The CMHC is the government owned agency that does housing research. They also oversee government guaranteed mortgage liquidity, so they do their homework. You know how your real estate agent says “a home is worth whatever someone is willing to pay?” Well, they disagree.

The CMHC looks for fundamental factors, and compares prices against the local context. Interest rates, wages, and price acceleration are in. Factors like your cousin Mikey thinks a lot of foreigners are buying “all of the land” are not. They then publish a terror alert color graded warning system for real estate. Here’s what they had to say about the country’s largest markets.

Toronto Real Estate

The agency noted cooling price growth, but still think Toronto is highly vulnerable. Slowing price growth “needs to persist” longer, to discount overheating and price acceleration. The agency still assigned it an overvalued rating, relative to market fundamentals. We know, your agent told you that Toronto was recovered and sales were going to boom in the fall. Back to school home shopping or something? They have doubts about wages and population density booming by then. Such Debby Downers.

Vancouver Real Estate

Canada’s most expensive market is seeing price growth slow, but it’s still “highly vulnerable.” Analysts observed price growth slowing over the past couple of quarters. They even observed prices turning negative in a few regions, and rising inventory. Despite that, they still believe the market is moderately overheated and highly overvalued. Remember, sales are slowing but Van still had the biggest price increase in the country.

Montreal Real Estate

Canada’s most overhyped market is surprisingly boring. Analysts noted the sales to new listings is approaching a threshold, but hasn’t passed. When and if it does pass that mark, it may become problematic. Until then, it’s just a normal real estate market doing normal things.

CMHC Canadian Real Estate Market Summary

Comparisons between the April 2018 and July 2018 reports, for Canada’s 15 largest markets.

Source: CMHC. Better Dwelling.

The CMHC said Canadian real estate is showing a high degree of vulnerability. On a regional level, Chief Economist Bob Dugan said he’s “seeing a fair amount of differences.” B.C. and Ontario markets are highly vulnerable. Meanwhile, Atlantic markets are just humming along.

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