Canada’s Housing Sector Moves from Moderate to a High Degree of Vulnerability in Q2 2021

Canada Mortgage and Housing Corp. (CMHC) on Tuesday (9-28-21) reported that the country’s housing sector moved from a moderate, to a high degree of vulnerability during Q2 of 2021. Montreal, Ottawa, and Toronto markets bear most of the risk. The CMHC ascribed the increasing vulnerability to price acceleration and overvaluations across the country and said the shift reflected an increasing and persistent imbalance in several local housing markets across Ontario and Eastern Canada.

In comments prepared for the report, Bob Dugan, CMHC’s chief economist said, “Even though we’ve seen a little bit of a moderation in some of the housing market statistics in the third quarter, when looking at the second quarter results…activity was still much stronger than even it is today. Housing market activity is very strong, price growth is still very strong and price levels are very high.”

Duggan and CMHC’s quarterly assessment assign low, moderate, or high vulnerability ratings to the entire country and 15 major cities based on four factors: overheating, price acceleration, overvaluation, and excess inventories.