There is “strong evidence of problematic conditions” in Toronto’s housing market and a quarter of the 15 biggest real estate markets in the country, according to the most recent Housing Market Assessment Report by Canada’s federal housing agency.

The biggest issue — in fact, it’s a concern in 11 of the 15 cities as of the end of September, up from just eight last June — is overvaluation, with high house prices not supported by economic factors or demographic demand, according to Bob Dugan, the Canada Mortgage and Housing Corporation’s chief economist.

Toronto, Winnipeg, Saskatoon and Regina are now all showing “strong” evidence of problematic conditions based on a combination of four factors — overheating, price growth acceleration, overvaluation and overbuilding — according to the quarterly assessment of potential problems in the country’s real estate market, released Thursday.

In Toronto, that’s driven largely by the continued surge in prices and by overvaluation, notes CMHC. The federal housing agency is also “monitoring” for signs of overbuilding in Toronto.

In Winnipeg, Saskatoon and Regina, most of the concerns come down to overbuilding and overvaluation.

“Problematic overvaluation conditions in local housing markets could be resolved by moderation in house prices and/or improving economic conditions,” Dugan said in a statement.

In some markets, it’s not so much that house prices are rising dramatically but that “underlying fundamentals” are eroding, such as dispensable income and employment.

Signs of overvaluation have actually increased since last June’s market assessment in Toronto, Vancouver, Montreal, Edmonton and Saskatoon.

Nationally, the risks of overvaluation remain “moderate,” says the report, which has been a work in progress over the year since it was first introduced by CMHC.

In 2014, one of the first reports — which Dugan likened to “an early warning system” aimed at highlighting concerns before they could lead to a market downturn — estimated that Canadian house prices were about 3 to 4 per cent overvalued.

That clearly didn’t go over well. So this year, CMHC was refusing to discuss numbers, citing the complexity of its risk models, and focusing more on colours — red for high risk, yellow for moderate and green for low.

This time around, the colours had taken a back seat, and the word “risk” had disappeared.

Cities now assessed as having “weak” signs of problematic conditions are: Vancouver (thanks to an increase in new listings and an uptick in new construction to better meet demand), Victoria, Calgary (slumping oil prices have doused that once-overheated market), Edmonton, Hamilton (although home sales grew faster than new listings in the second quarter), Moncton, Halifax and St. John’s.

Those city “moderate” signs of problematic conditions are: Ottawa, Montreal and Quebec city.

This week, the federal housing agency also warned that housing starts and house sales are likely to slow over the next two years, and house price gains slow — but not decline — as the market cools across the country.

Sales through the Multiple Listing Service (MLS) are expected to moderate nationally in 2016 and 2017 and price growth slow from 7.2 per cent in 2015 to just 1.3 per cent in 2016 and 1.4 per cent in 2017.

But any price growth is likely to remain uneven and likely to remain higher in Toronto and Vancouver, offset by the slowdown in Calgary.

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Toronto: Strong evidence of problematic conditions

Prices continue to accelerate into overvaluation territory because of lack of supply of low-rise houses. Condos under construction have been declining

Vancouver: Weak evidence of problematic conditions

House prices are rising faster than Toronto, but CMHC says this city is only moderately overvalued. Listings and new homes are rising to meet demand.

Calgary: Weak evidence of problematic conditions

This once-hot market is now cooling as oil prices and climbing unemployment ease fears of overvaluation back to moderate levels.

Montreal: Moderate evidence of problematic conditions

But fears of overvaluation remain strong because of slowing buyer demand. Number of completed and unsold condos has risen significantly in 2 years.

Halifax: Weak evidence of problematic conditions

Risk of overvaluation is dropping as population increases along with job prospects. But overbuilding is a concern as number of unsold condos grows.