CanadaB次元官网网址檚 housing market experienced overvaluation in some pockets of the country in the spring amid the COVID-19 pandemic, Canada Mortgage and Housing Corp. said in a new report released on Monday.

In cities such as Victoria, Moncton and Halifax, there was a widening gap between the selling price of houses and the price economists would expect, based on population growth, disposable income, mortgage rates and employment, the Crown corporation said.

That data comes from the agencyB次元官网网址檚 housing market assessment, which gives the housing market a grade based on whether homebuilding and rising prices could ultimately affect the stability of the economy. The report doesnB次元官网网址檛 look at whether homes are affordable B次元官网网址� but does try to inform homebuyers and lenders on what would happen to the equity in their homes if a sudden economic shock led to a spike in unemployment, for instance.

CMHC says there was a B次元官网网址渕oderate degree of vulnerabilityB次元官网网址� in the housing market as of the end of June, the same grade the market received in February.

The preliminary report shows the slowdown during the height of COVID-19 lockdown measures, but doesnB次元官网网址檛 include the record-setting sales in July and August B次元官网网址� nor does the data reflect the ending of government income supports and mortgage payment deferrals.

Because the reportB次元官网网址檚 analysis of home price overvaluation relies heavily on analyzing CanadiansB次元官网网址� income, the authors suggested that the risk might be underestimated.

B次元官网网址淭he unprecedented income supports from Canadian governments to households (such as the Canada Emergency Response Benefit and the Employment Insurance Benefits) provide relief to individuals experiencing financial hardship due to the COVID-19 crisis. These sources of income are, however, temporary,B次元官网网址� said the report.

CMHC economist Bob Dugan said that B次元官网网址� despite giving the housing market a steady grade this summer B次元官网网址� CMHC still expects a severe decline in home sales and in new construction to come as the economy recovers from the pandemic.

B次元官网网址淚 donB次元官网网址檛 think we are out of the woods yet. I certainly hope our forecast is wrong,B次元官网网址� said Dugan in a phone call with reporters.

In May and June, CHMC had given a grim outlook for the housing sector, including a steep decline in housing prices. Although realtors have reported record-high home sales and prices in July and August, Dugan said he is not convinced that there is a B次元官网网址渟ustainable basisB次元官网网址� for the current homebuying demand.

B次元官网网址淚B次元官网网址檓 not confident yet in walking away from some of our predictions, given the tremendous amount of risk to the economy and housing market,B次元官网网址� Dugan said.

While CanadaB次元官网网址檚 housing market as a whole does not show signs of overheating, outsized price acceleration or overbuilding, some regions do pose moderate risks, the report said.

Winnipeg, Edmonton and Calgary are areas where there is B次元官网网址渕oderateB次元官网网址� risk of overbuilding, CMHC said, looking at both second-quarter data and monthly inventories from July and August.

In Edmonton, there has been increased construction of detached homes despite weak employment in the oil sector, while in Winnipeg, incoming migration has slowed, CMHC analysts said. Calgary, meanwhile, has seen row houses and townhomes sit empty as cost-conscious buyers opt for condos instead B次元官网网址� leaving the city approaching its 2001 record-high of empty new builds.

The report also gave Canada a B次元官网网址渓owB次元官网网址� risk of price acceleration, but noted that prices are rising moderately more quickly in Ottawa and Montreal. In Montreal, the supply of homes for sale was at a 16-year low, pushing prices closer to B次元官网网址減roblematicB次元官网网址� levels.

The Ottawa and Montreal housing markets are also at a moderately higher risk of overheating, as are Hamilton, Ont., Quebec City and Moncton, CMHC said. Overheating happens when there is more demand to buy homes than there are listings.

B次元官网网址淭he high economic uncertainty and temporary public health and workplace safety restrictions placed on property showings caused a greater number of sellers to exit the market than buyers,B次元官网网址� the report noted.

Anita Balakrishnan, The Canadian Press

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