CMHC says Vancouver market has fundamentals to support above-average price levels

VANCOUVER (NEWS1130) – The federal housing agency does not agree with the popular view that Vancouver’s market is overvalued.

Canada Mortgage and Housing Corporation says “high house prices do not necessarily imply overvaluation.”

CMHC’s House Price Analysis and Assessment says “it is possible to have no overvaluation in a high priced centre, while overvaluation may exist in a lower priced centre.”

It cites Regina and Winnipeg as examples of the latter, saying those markets have a high risk of “problematic housing market conditions.”

CMHC says the Vancouver market has the fundamentals to support its above-average price levels. Those include land supply, income, population, and interest rates.

It adds that Vancouver and Toronto also support their high prices by attracting many immigrants, and because land is scarce.

Contrary to some analyses and popular opinion, CMHC says Vancouver’s housing market is at “low overall risk” for a correction.

The agency has found Vancouver has none of its four risk factors: overheated demand outpacing supply, acceleration in home-price growth, overvaluation, and overbuilding.

First-time home buyers focus on lower-priced options in suburban locales. At the upper end of the price spectrum, high net worth residents and those who have gained equity in their homes, are more

likely to buy single-detached homes in central locations and luxury properties.