Housing market 'moderately' vulnerable, CMHC says

Marco Green
September 23, 2020

Nonetheless, CMHC Chief Economist Bob Dugan reiterated the housing agency's forecast, pointing to the significant risks that continue to plague Canada's housing market. The report doesn't look at whether homes are affordable - 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. Vulnerability, or imbalances in the housing market, were deemed low in Ottawa, Winnipeg and the Maritimes.

Citing "tremendous risks" from the COVID-19 pandemic, Canada Mortgage and Housing Corp. The average price for August, reported last week by the Canadian Real Estate Association, was $586,000.

"The 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". Chief Economist Bob Dugan reiterated that forecast, though he cautioned that it's hard to predict the "peaks and troughs" and there are many moving parts.

"I don't think we are out of the woods yet".

"When I say I stand by our forecasts, it's really with respect to what are the broad trends we expect moving forward", Dugan said Monday on a conference call with reporters.

In May and June, CHMC had given a grim outlook for the housing sector, including a steep decline in housing prices. Benchmark prices rose 1.7 per cent in August and are now 9.4 per cent higher than in August 2019.

CMHC's considers four factors in assessing housing markets - the degree a market might be overheating, rising prices, how much properties are overvalued compared with fundamentals and whether developers are overbuilding new housing.

The agency's first quarter assessment, released earlier this year, showed overheating and price acceleration remained in Toronto, Hamilton and Vancouver, and in the resale markets of Montréal and Moncton.

Since the period covered in the report, Batch said, buyers and sellers have returned to the market and he guessed that some of the sales seen during the more active months of July and August represent transactions that were delayed by the lockdown.

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