Edmonton is one of three cities in Canada where a surplus of new housing is becoming a problem, the Canada Housing and Mortgage Corporation has found.

Two quarterly reports released Thursday by the CMHC show more housing units have been built than are needed in Edmonton, Calgary and St. John's, N.L.

The CMHC Housing Assessment said "evidence of overbuilding" went from moderate to high in the Edmonton market in the past quarter.

A building boom that started before the recession in 2015 is largely to blame, said Brent Weimer, CMHC's principal in market analysis for Edmonton.

"Large projects, apartment buildings, have a very long lead-lag time," he said. "So the planning process, the construction process, the completion and then the occupancy takes several years sometimes."

A lot of construction that began two or three years ago is now approaching completion, while demand has dipped, he said.

Brent Weimer, a CMHC principal in market analysis for Edmonton, said there's a lot of competition in the rental market and lots of condo apartments sitting no the market. (CMHC)

"We have a lot of competition in the rental market," he said. "We also have a large number of condo apartments just sitting on the market, just trying to find a buyer."

Richard Goatcher, an economic analyst with Building Industry and Land Development (BILD) Alberta, said builders have been going through a tough stretch.

"With the recession, which is largely in the rearview mirror, it's been a challenging time for the industry in terms of things like sales and margins."

The CMHC considers four issues when assessing a city's overall vulnerability level: Overheating (when demand outpaces supply), overbuilding, accelerated pricing, and overvaluation of house prices in comparison to levels that can be supported by the market.

Market conditions are expected to slowly transition from a buyer's market to a more balanced one in 2018 and 2019, the report said.

Elton Ash, regional executive vice-president with RE/MAX of Western Canada, said he believes Edmonton's market has already reached that point.

Market conditions are expected to slowly transition from a buyer’s market to a more balanced one in 2018 and 2019. (CBC)

"We've seen a pretty steady market through the year, prices remaining pretty stable, he said. "So, all in all, that is a relatively healthy perspective."

The CMHC report also found that prices in Edmonton are stable.

The good news is, with the job market getting stronger, the housing market is also recovering.

Toronto, Hamilton, Saskatoon, Victoria, Vancouver have highly vulnerable housing markets, the CMHC report shows.