Canadian housing market vulnerability increases, but Vancouver’s drops: CMHC

Vancouver’s housing market vulnerability rating has been reduced from “moderate” to “low” in the Canada Mortgage and Housing Corporation’s latest market assessment.

The results, released Tuesday, show the city is trending in the opposite direction of the housing sector nationwide, whose vulnerability rating increased from “moderate” to a “high degree” of vulnerability.

Bob Dugan, the corporation’s chief economist, suggested the COVID-19 pandemic may have played a role.

“Exceptionally strong demand and home price appreciation through the course of the pandemic may have contributed to increased expectations of continued price growth for homebuyers in several local housing markets across Ontario and Eastern Canada,” he said.

The number of home sales in Canada reached a historic high in the first quarter of 2021, the corporation reports, cooling slightly in the second quarter, but still at a historically high level.

There is low evidence of excess inventory nationwide, the third quarter assessment says.

In Vancouver, the corporation said price growth has “settled down” along with the pace of housing sales. Owners have listed their homes in “larger numbers than usual,” it added, which has eased competition between buyers.

Absent from the annual assessment, however, is the question of home affordability as it relates to household income.

Market vulnerability assessments are made based on a market’s vacancy rates, accelerating prices, level of demand against available supply, and the disparity between housing prices from a level that’s consistent with labour income, population, interest rates, and other factors.

In the assessment, the Greater Toronto Area remained at a high degree of market vulnerability. Montreal moved from moderate to high, Ottawa’s market kept its high vulnerability rating, and so did Halifax and Moncton, N.B.

Victoria, Calgary and Edmonton were all given moderate vulnerability rates, while Regina, Winnipeg and the rest of Quebec all show a low degree of market vulnerability.