Toronto is now at “high” risk of a housing correction — up from “moderate” just four months ago, says a quarterly examination of risks to the national housing market, released by the Canada Mortgage and Housing Corporation Thursday.

But rather than put a real number to that risk — the federal housing agency estimated the Canadian market was about 3 to 4 per cent overvalued last April — its economists are sticking to colours.

Toronto’s a red for risk.

Vancouver, surprisingly considered at low risk despite a surge in house sales and prices this year, is green. Montreal is at moderate risk, or yellow.

The risk models and housing analysis used by CMHC economists are just too complex and subject to too many variables, CMHC’s chief economist told reporters yesterday in a conference call, declining all efforts to put some numbers to the risk levels in its quarterly House Price Analysis and Assessment (HPAA) report released Thursday.

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Overall, the Canadian housing market remains at “modest risk” — a yellow — of overvaluation, said Dugan, although conditions remain low risk in most of the 15 major real estate markets examined.

“Basically, the HPAA is attempting to identify problematic conditions before they get too far down the line so the market can adjust in a more healthy way,” said chief economist Bob Dugan.

Just seeing CMHC talk about elevated risk in a market might encourage builders, for instance, to pull back as to not oversupply the market, he added.

But numbers aren’t helpful, he added, since almost no one can agree on how overvalued — or even undervalued — the Canadian housing market might be right now.

“I really don’t think a number, unqualified, helps people. I think it can alarm people. If the number is high, it doesn’t necessarily mean it’s bad because you don’t know what levels are problematic and (they can vary) for different centres across Canada.”

Toronto’s boost from yellow — moderate as of last April’s report — to red is driven is driven largely by high price appreciation this year in the low-rise house sector, and the sale of more higher-end houses, said Dugan.

That’s on top of ongoing concerns about the elevated number of unsold condos on the market, although the “saving grace” has been the low rental vacancy rate — about 1.3 per cent for rental condos — which means those that aren’t selling can be rented, said CMHC Toronto market analyst Dana Senagama.

Winnipeg and Regina, like Toronto, remain at high risk, but for different reasons: Regina is at risk more because of overbuilding in the condo sector, although house prices remain high relative to incomes, the report notes.

Prices have been dropping recently and, if that continues, any risk in Regina’s house sector should be gone by the end of the year, says CMHC.

Winnipeg’s risk of overvaluation has eased since April, as the market has become more balanced and price increases have moderated, says the report. The biggest concern is that “the number of (condo) units under construction and the number of completed and unsold units are high.”

On top of that, builders are likely to proceed with more condo projects now in the planning stages, notes CMHC.

Vancouver is considered low risk because average prices have been skewed by higher-end house sales to wealthy individuals, said Dugan.

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Some 20 per cent of homes there are selling for $2.2 million plus, but the remaining 80 per cent are averaging just $555,000 he said. Also factored into the Vancouver analysis is historic perspective — it’s long been the priciest market in Canada — and the fact supply is limited by geography, which boosts prices.

“Resale market conditions remain balanced, keeping price growth in check. Despite high Vancouver home prices, demand for housing across the price spectrum is supported by a growing population and growth in personal disposable income as well as by the limited supply of land,” it says.

First-time buyers have adjusted by focusing their attention on more suburban areas, notes the report, while high-end demand is supported by wealthy buyers or move-up buyers with lots of equity from previous homes, adds the report.

However, the federal housing agency is monitoring the risk of condo overbuilding in Toronto, Ottawa and Montreal. Ottawa is now at low risk of a housing correction while Montreal is at moderate risk, according to CMHC.

“Condominium units under construction (in those three cities) are near historical peaks. Inventory management is therefore necessary to make sure that these condominium units under construction do not remain unsold upon completion.

Most Canadian cities remain are low risk of a correction, including Victoria, Calgary, Edmonton, Saskatoon, Hamilton, Moncton, Halifax and St. John’s.

Quebec city is on the list of cities facing moderate risk.

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