Thu. Jun 30th, 2022

Cities at expensive prices make the housing market across Canada vulnerable, the crown agency says

The real estate market in the Greater Toronto Area, where a two-bedroom bungalow in need of TLC is listed for $ 2 million, remains at a high level of market vulnerability, according to the Canada Mortgage and Housing Corporation (CMHC).

According to CMHC’s latest housing market assessment, price acceleration and overvaluation, as house prices continue to rise above income levels, leave the entire real estate market in Canada with a high degree of vulnerability. This means that Canadian real estate is ready for a marked downturn with major consequences. And it is primarily the hot real estate markets in Ontario like Toronto and eastern Canada that are pushing the entire country to the current high level of vulnerability.

Toronto, Hamilton, Ottawa, Halifax and Moncton have all been highly market vulnerable for some time. They are now joined by Montreal, which recently moved from moderate to high with sharply rising prices. Vancouver, on the other hand, went from a moderate to low degree of market vulnerability.

“Unusually strong demand and rising house prices during the pandemic may have contributed to increased expectations of continued price growth for homebuyers in several local housing markets throughout Ontario and Eastern Canada,” said Bob Dugan, CMHC’s chief economist, in a statement. “This in turn may have led to more buyers entering the market than was justified.”

According to CMHC, home sales reached historic highs in 2021, but there were low signs of excess inventories, meaning there are not many vacancies among newly built and unsold homes or rental apartments. Real estate sales in Toronto may be cooling, but demand is still significantly greater than supply, and prices are still rising at an increasing pace over the sustained period.

Properties like the 374 Joicey two-bedroom bungalow indicate where things are and sellers are sure they can pick up a ridiculously high price too much from buyers who want to create more supply.

The property near Bathurst and 401 with its dated kitchen and carpets is habitable. But the listing invites builders or investors to tear it down and create a custom-built house or two (the plot is large enough to cut). The $ 1,999,988 price list is actually a drop from the $ 2,295,000 it was linked to earlier in the year, which was itself a drop from the $ 2,475,000 it was quoted at the end of last year. Still, the listing price is still much higher than the average selling price of $ 1.7 million for a detached house in the City Of Toronto.

According to CMHC, while the real estate market in Toronto is extremely vulnerable due to overheating and price acceleration, there are low signs of overvaluation. The high prices in Toronto do not differ significantly from the city’s housing market fundamentals such as income, population and interest rates.

And according to CMHC, it’s the suburbs of Toronto that are really feeling the effects of overheating. The sales-to-new listing ratio (SNLR) in the city where there is plenty of apartment supply is 64 percent. Meanwhile, more people pushed away from home and sought more space SNLR much higher in Durham (86 percent), Halton (86 percent) and Peel (81 percent).

The Toronto emigration keeps the Halifax and Moncton property overheated. CMHC cites population growth from high interprovincial migration as a factor that their local housing is overvalued and with a high degree of vulnerability.


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