CMHC says Vancouver market no longer ‘highly vulnerable’ as price acceleration eases

Canadian Real Estate Association projects that the national average price will drop 0.6 per cent

CMHC says Vancouver market no longer ‘highly vulnerable’ as price acceleration eases

The Canada Mortgage and Housing Corp. has lowered the vulnerability rating of Vancouver’s housing market to ”moderate,” marking the first change in three years as prices have eased.

The federal agency says in a report that “evidence of price acceleration” in Vancouver has eased to low, prompting a downrating after 12 consecutive quarters of being flagged as “highly vulnerable.”

“While home price growth over the past few years significantly outpaced levels supported by fundamentals, these imbalances have narrowed through growth in fundamentals and lower home prices in different segments of the resale market,” CMHC said in its latest Housing Market Assessment report.

The agency said a moderate degree of vulnerability remains at the national level, but imbalances between house prices and housing market fundamentals have narrowed over the past year. However, certain markets such as Toronto and Victoria are at higher risk.

Nationally, the inflation-adjusted average price decreased 5.6 per cent in the first quarter of 2019 from the same period a year earlier, the fifth-consecutive decline on a year-over-year basis, CMHC said.

READ MORE: B.C. housing sales predicted to slow, prices to fall in 2019

In the previous quarter’s report, CMHC lowered its rating for Canada’s overall housing market from to moderate from high vulnerability — where it had stood for 10 consecutive quarters — as mortgage stress tests introduced last year made it harder for homebuyers to qualify and eased price acceleration.

The Canadian Real Estate Association’s latest market forecast released in June projects that the national average price will drop 0.6 per cent by the end of this year to roughly $485,000, compared to the 4.1 per cent drop recorded in 2018.

However, the pattern is split between the eastern and western parts of the country. For example, while average prices are forecast to fall in British Columbia, Alberta and Saskatchewan, higher prices are expected in Ontario, Quebec and the Maritimes.

Dropping housing prices are a particularly welcome sight in Vancouver, which was cited in January as the second-least affordable major housing market in the world out of 91 markets by urban planning company Demographia. Vancouver came second to Hong Kong, but was less affordable than the likes of San Francisco and London, U.K.

The latest statistics from the Real Estate Board of Greater Vancouver showed that the benchmark price of a home in Metro Vancouver dropped to $998,700 in June, the first time it fell below the $1 million mark since May 2017.

The Bank of Canada in May also said that housing prices in the key markets of Vancouver and Toronto have cooled, but imbalances in real estate markets are still an important vulnerability for the overall financial system.

CMHC’s bases its vulnerability assessment on several criteria including price acceleration, overvaluation, overbuilding, and overheating. It examines the degree of vulnerability and is intended to identify imbalances in the housing market.

Toronto, Hamilton and Victoria continue to have a high degree of vulnerability, but overheating, price acceleration and overvaluation show signs of abating in all three markets.

Edmonton, Calgary, Saskatoon, Regina and Winnipeg have moderate vulnerability, but evidence of overbuilding remains.

Ottawa, Quebec City, Halifax, St. John’s, N.L., Montreal, Moncton, N.B., all have low overall vulnerability. However, overheating persists in Montreal and Moncton while overbuilding remains in St. John’s, CMHC added.

For the second consecutive quarter, moderate evidence of overvaluation continues to be the only sign of vulnerability for Canada as a whole, said CMHC’s chief economist Bob Dugan.

“Imbalances between house prices and housing market fundamentals have narrowed with declining home prices in the resale market and a growing pool of potential first-time homebuyers,” he said in a statement. “This dynamic contributes to closing the overvaluation gap.”

Armina Ligaya, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

RNG plant
Construction on ground-breaking RNG plant in Fruitvale set to go in spring 2021

REN Energy partners with Calgary engineering firm for innovative West Kootenay gas plant

Terry Miller
Rossland voters select Terry Miller as new councillor

City of Rossland releases results of advance voting and final voting day of council byelection

COVID-19. (Image courtesy CDC)
47 new COVID-19 cases in Interior Health region

1,538 total cases, 399 are active, ten in hospital

This picture of Taghum resident Marc Savard was taken in February when he first spoke to the Nelson Star and little was known about the virus that had shut him out of his job in Wuhan, China. Photo: Tyler Harper
VIDEO: Once an outlier, Nelson man’s COVID-19 experience now typical

Savard was living in Wuhan, China, when the pandemic began

A strong contingent of Trail Smoke Eaters helped out Kiwanis by unloading up to 600 trees at Butler Park on Wednesday, in preparation for their annual Christmas Tree Sale and community fundraiser. The sale starts on Friday, with all funds donated to community groups. Photo: Jim Bailey
Trail Kiwanis Christmas tree sale – a harbinger of the holiday season

Kiwanis is offering free christmas tree delivery for seniors without adequate transportation

Idyllic winter scenes are part of the atmosphere of the holiday season, and are depicted in many seasonal movies. How much do you know about holiday movies? Put your knowledge to the test. (Pixabay.com)
QUIZ: Test your knowledge of holiday movies and television specials

The festive season is a time for relaxing and enjoying some seasonal favourites

Black Press Media and BraveFace have come together to support children facing life-threatening conditions. Net proceeds from these washable, reusable, three-layer masks go to Make-A-Wish Foundation BC & Yukon.
Put on a BraveFace: Help make children’s wishes come true

Black Press Media, BraveFace host mask fundraiser for Make-A-Wish Foundation

A man walks by a COVID-19 test pod at the Vancouver airport in this undated handout photo. A study has launched to investigate the safest and most efficient way to rapidly test for COVID-19 in people taking off from the Vancouver airport. The airport authority says the study that got underway Friday at WestJet’s domestic check-in area is the first of its kind in Canada. THE CANADIAN PRESS/HO, Vancouver Airport Authority *MANDATORY CREDIT*
COVID-19 rapid test study launches at Vancouver airport for departing passengers

Airport authority says that a positive rapid test result does not constitute a medical diagnosis for COVID-19

Vees goalkeeper Yaniv Perets stands watch while Tyler Ho takes the puck around the back of the net on Nov. 7. The BCHL press release did not name the player who tested positive.(Brennan Phillips - Western News)
Penticton Vees quarantining after player tests positive for COVID-19

The team, staff and billets are isolating while they are tested

114 Canadians were appointed Nov. 27 to the Order of Canada. (Governor General of Canada photo)
Indigenous actor, author, elder, leaders appointed to Order of Canada

Outstanding achievement, community dedication and service recognized

Screenshot of Pastor James Butler giving a sermon at Free Grace Baptist Church in Chilliwack on Nov. 22, 2020. The church has decided to continue in-person services despite a public health order banning worship services that was issued on Nov. 19, 2020. (YouTube)
2 Lower Mainland churches continue in-person services despite public health orders

Pastors say faith groups are unfairly targeted and that charter rights protect their decisions

A big job: Former forests minister Doug Donaldson stands before a 500-year-old Douglas fir in Saanich to announce preservation of some of B.C.’s oldest trees, July 2019. (B.C. government)
B.C. returning to ‘stand-alone’ forests, rural development ministry

Horgan says Gordon Campbell’s super-ministry doesn’t work

Peter Wilson, left, and Micah Rankin, right, formed the Special Prosecutor team that was tasked with reviewing and litigating charges stemming from the Bountiful investigation. Trevor Crawley photo.
End of Bountiful prosecution wraps up decades of legal battles

Constitutional questions had to be settled before a polygamy prosecution could move forward

2020
Urban wildlife Part VI: The East Kootenay birds of autumn

The work of local photographers printed in the pages of the East Kootenay Advertiser throughout 2020. Part VI.

Most Read