According to the Canada Mortgage and Housing Corporation, (CMHC), the Vancouver home prices and sales to listings ratios are increasing as the temperatures rise. Well, this is creating continuing problematic conditions for the real estate market.
The Housing Market Analysis for the latest quarter for the Vancouver Census Metropolitan Area (CMA), which examines 2017’s first quarter, the CMHC said that it detected a strong evidence of over valuation in Metro Vancouver housing market. The growth in economic fundamentals such as population and wages cannot fully account for the recent run up in home prices since the third quarter of 2015.
The report also added that the population and wage growth along with record low mortgage rates continue to be supportive of house price growth. In Vancouver, particularly, job creation has been strong. However, the HMA framework suggests that the price levels have exceeded those supported by these strong local fundamentals. The current price levels however, appear stretched both relative to income and across housing types.
The quarterly HMA (Housing Market Analysis) assesses the real estate markets across Canada, using four key risk factors
• Overheating, when demand for homes in the region outpaces the supply
• Sustained acceleration in house prices
• Overvaluation of house prices in comparison to levels that can be supported by economic fundamentals
• Overbuilding – when the inventory of available housing units is elevated.
Out of these, only one of the four risk factors saw a strong evidence of problematic conditions, in Vancouver, it was enough to give a higher overall risk rating. Along with Vancouver, Victoria, Toronto, Hamilton and Saskatoon also saw similar conditions.
Despite the high demand and low supply, the CMHC also detected only moderate evidence of overheating during the first quarter.
The conditions in the different housing segments of Vancouver market have further diverged since the beginning of the year.
The HMA also said that there was moderate evidence of price acceleration in Metro Vancouver’s housing market for the fifth consecutive quarter. This reflected the recovery of home prices during the first quarter following a decline in the second half of 2016.
Scant evidences of overbuilding in Greater Vancouver housing market continues to be found. Low new home inventories and low vacancy rates in the primary rental market point to weak evidence of overbuilding.
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