Canada’s overall housing market conditions improve as price acceleration eases

On a quarterly basis, CMHC issues the HMA to provide Canadians with expert and impartial insight and analysis, based on the best data available in Canada. This report provides a comprehensive view of housing market vulnerabilities and identifies imbalances. It does not identify long-term fundamental affordability challenges.

Results are based on data as of the end of December 2018 (the annual rental apartment vacancy rates are from October 2018) and market intelligence up to the end of March 2019. This national report provides the housing market assessment at the national level and summary assessment results for 15 Census Metropolitan Areas (CMAs). For each of these CMAs, CMHC also issues a local report with more information and analysis.

Key Highlights:

• While house prices in Vancouver, Victoria, TorontoandHamilton continue to move closer to levels supported by housing market fundamentals such as population, personal disposable income and interest rates, we continue to see a high degree of vulnerability in their overall assessment.
• Vancouver’s evidence of overvaluation has changed from high to moderate and conditions of overheating are easing as well. Home price growth over the past few years significantly outpaced income growth; these imbalances are now unwinding based on continued growth in economic fundamentals and lower resale home prices.
• In Toronto, conditions of overvaluation continue to ease, as house prices are more in line with housing market fundamentals. Market activity continued to cool during the first quarter of 2019, with the sales-to-new listings ratio remaining firmly in balanced market territory and the MLS^® average price continuing to decrease.
• Edmonton, Calgary, Saskatoon, Reginaand Winnipegremain at a moderate degree of overall vulnerability as we continue to see evidence of overbuilding in these centres.
• In Edmonton, where the rental market is tightening, the imbalance between supply and demand in the ownership market is widening. As of February 2019, 61% of the total single- and semi-detached inventory in Alberta’s seven largest markets combined were in Edmonton.
• Low degree of overall vulnerability continues for Ottawa, Montréal, Québec City, Moncton, HalifaxandSt. John’s.
• Evidence of overheating exists in the resale markets of Montréal and Moncton due to tightening in supply and demand. In 2018, Moncton had a record number of sales as its population increased at three times the provincial rate. While demand remains strong, new listings are declining to historic lows.

Assessments for Canada and all 15 CMAs are available in the graph located in the release backgrounder.

CMHC defines vulnerability as imbalances in the housing market. Imbalances occur when overbuilding, overvaluation, overheating and price acceleration – or combinations thereof – depart significantly from historical averages.

The HMA takes into account demographic, economic and financial determinants of the housing market such as population, personal disposable income, and interest rates to detect vulnerability. The framework also takes into account recent developments in both resale and residential construction markets.

The HMA was developed on the basis of its ability to detect vulnerable housing market conditions in historical data, such as the house price bubble Toronto experienced in the late 1980s and early 1990s. The ability of the HMA to detect vulnerabilities relies on the assumption that historical relationships between prices and fundamental drivers of housing markets have not changed.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

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