More Canadian housing markets edge into risky territory

Discussion about Canadian housing markets has been dominated by hot cities such as Toronto and Vancouver in recent months, but hot is edging into overheating, and it’s a problem.

And it’s not just those two markets anymore.

Evidence of problematic conditions in Canada’s housing market as a whole has increased from weak to moderate, according to the latest Housing Market Assessment (HMA) from Canada Mortgage and Housing Corp. (CMHC). In Vancouver, there is now sufficient evidence to raise the overall assessment of problematic conditions in the housing market to high.

The HMA is intended to serve as an early warning system, alerting Canadians to areas of concern developing in housing markets so they can make better informed homebuying decisions.

CMHC defines evidence of problematic conditions as imbalances in the housing market, caused by overbuilding, overvaluation, overheating and price acceleration, or combinations thereof, which are significantly above historical averages.

“For Canada overall, we now detect strong evidence of overvaluation,” says Bob Dugan, chief economist, CMHC. “As a result, our overall assessment has moved from weak to moderate since the last report (April). Moreover, the greater range of evidence of problematic conditions in Vancouver has led us to conclude that there is now strong evidence of problematic conditions in our overall assessment of the Vancouver housing market.”

Other report highlights include

  • Overvaluation and overbuilding remain the most prevalent problematic conditions observed across the 15 centres covered by the HMA.
  • Strong evidence of problematic conditions is seen in Vancouver, Toronto, Calgary, Saskatoon and Regina. In Toronto and Vancouver, this is due to the combination of price acceleration and overvaluation. In Calgary, Saskatoon and Regina, this is due to the combination of overvaluation and overbuilding.
  • Moderate evidence of problematic conditions is also seen in Edmonton, Winnipeg, Hamilton, Montreal and Quebec.
  • Evidence of overvaluation has increased in Hamilton.
  • Overall evidence of problematic conditions has decreased in Ottawa.


In Vancouver, it’s not just single-family homes that are showing evidence of overheating. The worrisome characteristics are also surfacing in townhomes and condos.

“We’re seeing moderate evidence of overheating and price acceleration in Vancouver because supply is not keeping pace with demand,” says Robyn Adamache, principal market analyst for Vancouver, CMHC. “We’re also continuing to see strong evidence of overvaluation mainly because single-detached home prices are higher than those supported by economic fundamentals.”

Canada’s other ultra hot market, Toronto, is causing a spillover in adjacent areas. Since 2013, migration patterns have shown that Hamilton, for example, is attracting buyers who have been priced out of the Toronto market, in search of more affordable homes.

Durham Region is benefitting from a similar trend, says Dana Senagama, principal market analyst for Toronto. “Oshawa is the hottest market right now – listings-to-sales ratios are over 75 per cent – attracting first-time buyers and others, since the price point is about 50 per cent lower than average prices in Toronto.”



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