The Canada Mortgage and Housing Corporation has bumped its risk rating for the country’s real estate markets to “red,” with home prices rocketing beyond income and population growth.
To get an explanation of what that rather ominous warning means here in Vancouver, we spoke with Robyn Adamache, Senior Market Analyst for the CMHC.
LISTEN: Red alert for Canada’s housing markets
The CMHC determines its risk rating based on four factors: Overheating of demand, acceleration of demand, acceleration of house prices, and overbuilding.
Adamache says the move to “red” at a national level comes as they’re now seeing combinations of several markets showing those problematic conditions.
Here in Vancouver, Adamache says we’ve actually been in the red zone for a couple of quarters — even though prices and sales both started to level off back in the spring.
“We don’t want to just call a market, move it from yellow to red or from red to yellow with just one or two data points, we like to see several quarters of data before we make that move so we’re not just reacting to what could be a blip in the market.”
Despite things cooling off a little, Adamache says the city isn’t out of trouble yet, particularly when it comes to housing supply.
“The new supply of new homes, the unsold inventory of new homes is near record low levels as I’m sure you know the resale supply for many months now has … been near record lows.”
So what can Vancouverites expect in 2017 and beyond?
Adamache says the CMHC’s modelling doesn’t see any big changes in the fundamentals underlying Metro Vancouver’s market, with employment and population growth expected to hold steady in the coming years.
She says that means more leveling off in the market, with both sales and housing starts expected to move closer to the long term average.
But those hoping for a dip in housing prices are probably out of luck.
“Vancouver has notoriously sticky housing prices.”
She says they should cool off a little bit though, meaning we’re unlikely to see the jaw dropping double digit gains that made headlines last year, instead tracking closer to the rate of inflation.