Canada's federal housing agency has raised new alarms about Canada's housing market, warning that euphoria over real estate is spreading beyond detached homes in Toronto and Vancouver to townhouses and condos, and to other cities.

Canada Mortgage and Housing Corp. said in its quarterly market assessment released on Wednesday that it sees what it calls "moderate evidence of problematic conditions" in the housing market after months of soaring demand have pushed national home prices up 14 per cent compared with a year earlier, faster than what economic drivers such as employment and income growth should support.

While CMHC said most of the problems in the housing market remain concentrated in Toronto and Vancouver, it also raised red flags about Hamilton, a city near Toronto, and the national market.

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The CMHC uses the assessments when it makes its decisions on whether to approve mortgage insurance for home buyers who do not have a 20 per cent down payment.

The federal housing agency joins a growing chorus of voices that have raised concerns about the Canadian housing market.

The Bank of Canada warned last month about the "increased riskiness" of mortgage debt. This week, the Office of the Superintendent of Financial Services said it would require lenders to stress-test their mortgage portfolios to ensure they could withstand a drop in home prices of 50 per cent in Vancouver and 40 per cent in Toronto. Earlier this month, the banking regulator issued an open letter pointing to record levels of household borrowing and saying it felt the "risks and vulnerabilities for financial institutions have increased."

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Market analysts for the Crown corporation said they found signs that prices are starting to climb for traditionally more affordable condos and townhouses in addition to single-family homes. They said the pace of growth in home prices has started to pick up outside the Greater Toronto and Vancouver areas, with demand spreading to other regions of British Columbia and Ontario. It offered new warnings about strong price gains in Hamilton, west of Toronto.

"What we're also detecting now is a spreading of those price pressures to neighbouring communities," said Bob Dugan, CMHC's chief economist.

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The federal housing agency also said it finds "strong" evidence of what it described as "vulnerabilities" in Vancouver's housing market, with prices becoming unaffordable in relation to local incomes and demand exceeding supply. Average prices in the region have soared more than 30 per cent from the same time last year. CMHC also indicated increasing demand for more affordable properties in suburban neighbourhoods.

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"We have started to see … both townhomes and apartments also moving into overheated conditions," said CMHC Vancouver analyst Robyn Adamache, "whereas before it was mostly on the single-family side."

The B.C. government is attempting to cool the Vancouver market, announcing that, starting next week, it will add 15 per cent to the property transfer tax for people who are not citizens or permanent residents who buy homes in Metro Vancouver. The province released new estimates showing that one in 10 homes sold in the region between June 10 and July 14 went to international buyers, with the majority in the City of Vancouver. The figures translate into more than $885-million worth of home sales.

CMHC's Mr. Dugan said it was too early to tell how the new tax would affect Vancouver's housing market, or whether it would significantly curb demand from foreign investors for Canadian housing, which remains relatively inexpensive compared with some global real estate markets, such as Shanghai.

"How much that affects the relative price advantage of Vancouver versus Shanghai real estate for example, we just haven't had enough analysis yet to be able to determine that," he said.

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CMHC says it intends its quarterly market assessment to be an "early warning system" for home buyers, developers and mortgage lenders to consider the state of the local market when they make their decisions, rather than a signal that any area is headed for a crash.

However, in the past, CMHC has found that combinations of problem conditions in a market have corresponded with spikes in claims for its mortgage-default insurance. The Crown corporation's local market assessments are among the factors it considers when deciding whether to approve an individual application for government-backed mortgage insurance.

Here is a look at what CMHC found in the housing markets of major census metropolitan areas across Canada in its third-quarter report:

Vancouver and Victoria

CMHC upgraded its assessment the Vancouver regional market to "strong evidence of problematic conditions" up from "moderate" in April and "weak" in January. It pointed to home prices that have soared over the past year, eroding affordability for local buyers, along with a dwindling supply of homes on the market to meet demand.

In particular, CMHC flagged a shift in demand toward more affordable properties and away from expensive detached homes at a time when listings for single-family homes have started to increase in the region. In West Vancouver, for instance, CMHC said the sales-to-new-listings ratio – a measure of supply and demand – was 121 per cent for condos. In other words, for every 100 condos put on the market in May there were 121 sales (including earlier listings), signalling a hot sellers' market. For detached homes the ratio, was just 48 per cent, or a balanced market. "The results show that the single detached market has cooled somewhat in some of the more expensive locales," CMHC wrote, adding that high demand for less expensive properties has narrowed the gap between single-family and multi-family homes.

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It saw "weak" evidence of problems in Victoria, despite what it said were signs the market is beginning to overheat as sales have outpaced new listings.

Calgary and Edmonton

While home prices in Calgary have fallen this year, they are still higher than the city's weakened oil economy can support, CMHC said. The vacancy rate jumped above 5 per cent in October and has continued to rise, leading to what CMHC said was a concern about overbuilding and "strong evidence of problematic conditions." In Edmonton, the risks remained "moderate," largely because home prices have not fallen enough to reflect the slowing economy.

Regina and Saskatoon

CMHC reiterated its "strong" concerns about Regina and Saskatoon, driven by high levels of new-home construction and a rising vacancy rate, even as home prices have fallen amid the fallout from a weakened commodities sector.

Winnipeg

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Winnipeg continued to show "moderate" evidence of problems, mainly because of high levels of new condos sitting unsold on the market or under construction, CMHC said. It also predicted the city's vacancy rate would rise because of a surge in new rental apartment construction.

Toronto and Hamilton

The federal housing agency has long warned of "strong" evidence of problems in the Toronto market, although it raised red flags about Hamilton for the first time.

In Toronto, it pointed to a tight market, with new listings falling even as sales have continued to surge. Sales of homes priced above $2-million soared 41 per cent in the first three months of the year compared to the previous quarter. Toronto's market has been supported by low mortgage rates and strong employment growth, particularly in jobs connected to the housing market, CMHC said. Still, home prices have outpaced even the city's relatively robust economic growth. "The growth in house prices persistently outpaced economic and demographic fundamentals," the housing agency wrote.

CMHC also warned of "moderate" evidence of problems in the Hamilton market as home sales have boomed even though immigration to the city has slowed and job growth has been weak. "Hamilton's employment growth has been consistently slowing since the third quarter of 2014, while house prices have grown faster," the Crown corporation wrote.

Ottawa

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Ottawa's market turned a corner in the early part of the year and CMHC said it now saw "weak" evidence of problems, down from "moderate" in the second quarter. Rising levels of unsold, newly built condos began to drop after the first three months of the year and rental vacancy rates have also increased, but home prices have slowed in line with a softer economy, CMHC said.

Montreal and Quebec City

CMHC said it found "moderate" evidence of problems in the housing markets of both Montreal and Quebec City. Home prices in both cities are higher than supported by slowing income growth and a drop in the population of workers aged 25-34, who are most likely to be first-time home buyers. The two markets are also grappling with unsold newly built condos languishing on the market, aggravated by high levels of condo construction, although it said the supply of new homes has begun to come down.

Atlantic Canada

The federal housing agency said it saw little cause for concern in Atlantic Canada's urban housing market, pointing to "weak" evidence of problems in Halifax, Moncton and St. John's.