The CANADIAN PRESS
Canada Mortgage and Housing Corp. says the jump in home prices seen in many cities this summer and fall was beyond what could be justified by Canadian income levels and population growth.
The comment was part of the CMHC’s Housing Market Assessment, which concluded that Canada’s residential real estate market is as vulnerable to a housing bubble as it was earlier this year.
The report categorizes 15 Canadian cities as having low, moderate, or high vulnerability based on whether the local real estate market is seeing overheating, rapidly rising prices, overvaluation, or overbuilding.
Overall, CMHC says the Canadian housing market is moderately vulnerable, but now has more high-risk cities and fewer low-risk cities.
CMHC says Hamilton and Moncton, NB have become highly vulnerable amid price acceleration and overvaluation of homes in the second half of this year.
Overvaluation of homes has also increased in Toronto, Montreal and Regina, although all three cities are only considered moderately vulnerable to the type of conditions seen in the late 1980s and early 1990s Toronto housing bubble.
The Canadian Real Estate Association expects the national average home price will rise 9.1 per cent to $620,400 in 2021, in one of the most optimistic forecasts yet for the real estate sector.
The real estate association says it expects home prices to either hold steady or climb in all regions across the country, citing economic improvements from the lows of the COVID-19 pandemic.
It is one of the cheerier forecasts out there, as the industry tries to make sense of a hot real estate market against a backdrop of lingering unemployment and an uncertain end date to the COVID-19 pandemic’s second wave.
Re/Max is predicting 2021 price increases of four per cent to six per cent, while Royal LePage is betting on a 5.5 per cent price hike, Ratehub sees prices rising four per cent to seven per cent, and Fitch Ratings expects home prices to decline three per cent to five per cent next year.
CREA’s forecast says that after home sales plunged this spring, the real estate market not only rebounded to record highs in summer, but continued its multi-year trend of demand exceeding supply.
Headed into 2021, CREA says even more homes will be sold, although monthly home sales are likely to ease back to more typical levels compared to 2020’s wild swings.