The country's housing market appears to be headed toward a "moderate" state of vulnerability due to a second consecutive quarter of increasing market volatility.
The Canada Mortgage and Housing Corporation explained today that the majority of the stress has been placed on the cities of Toronto, Ottawa, Hamilton, Halifax and Moncton - who all saw elevated degrees of vulnerability in 2021's first quarter on account of aggressive overvaluations and rising prices.
Ontario's cottage country as well as the Niagara, North Bay and Bancroft regions are also contributing to the market pressure. And though these regions aren't monitored for vulnerability levels, they are making for a part of national data, explained CMHC chief economist Bob Duggan.
"These are centres that are not the ones that are usually on our radar when we are thinking of price escalation and housing imbalances," he said during a media briefing. "We have to keep in mind that much of the recent pressure has occurred in some of these smaller communities and therefore not fully reflected in our assessment today.".
The aforementioned assessment gives ratings of low, moderate or high vulnerability every quarter to the major Canadian markets. Overvaluation, overheating, price acceleration and excess inventories are all considered when these ratings are assigned.
Housing agencies have been keeping a close on the real estate market since COVID-19 because many large markets have seen too many buyers with too little inventory available. This situation has pushed prices upward in not only cities like Vancouver and Toronto, but rural areas - which have become attractive to buyers who can work remotely and are looking for more space.
The CMCH moved Halifax and Toronto's vulnerability degree from moderate to high this past quarter as Ontario house prices soared and Nova Scotia's market saw considerable overvaluation. The Vancouver, Victoria and Montreal markets remained at moderate ratings, even as transaction count was high.