OTTAWA, April 27, 2016 — Overvaluation is detected in nine Census Metropolitan Areas (CMAs) and overbuilding in seven, according to the latest Housing Market Assessment (HMA) released today by the Canada Mortgage and Housing Corporation. Nationally, CMHC detects moderate evidence of overvaluation.

The HMA serves as an early warning system, alerting Canadians to areas of concern developing in our housing markets so that they may take action in a way that promotes market stability.


Overvaluation and Overbuilding Remain Prevalent in Canada's Housing Markets

Foreground: Bob Dugan, CMHC Chief Economist
Background: Courtyard setting, trees, flags, building facade.

Bob Dugan: "While we see weak evidence of problematic conditions for Canada, we do detect moderate evidence of overvaluation. This means that house prices are higher than levels that can be supported by fundamental factors such as income growth and population growth."

Report Highlights

  • Overvaluation and overbuilding remain the most prevalent problematic conditions observed across the 15 centres covered by the HMA.
  • Overvaluation is detected in nine centres while overbuilding is detected in seven.
  • The evidence of overvaluation has increased since the previous assessment in Vancouver, Hamilton, and Saskatoon.
  • Strong evidence of problematic conditions overall is seen in Toronto, Calgary, Saskatoon and Regina. In Toronto, this is due to the combination of price acceleration and overvaluation. In Calgary, Saskatoon and Regina, this is due to the combination of overvaluation and overbuilding.
  • Moderate evidence of problematic conditions overall is seen in Vancouver, Montreal, Edmonton, Ottawa, Winnipeg and Quebec.

CMHC defines evidence of problematic conditions as imbalances in the housing market. Imbalances occur when overbuilding, overvaluation, overheating and price acceleration, or combinations thereof depart significantly from historical averages. For examples, please consult the Overview section of the national report.

The complete HMA, including national, regional and CMA insight and analysis, is available here.

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“While we see weak evidence of problematic conditions overall nationally, we do detect moderate evidence of overvaluation, meaning house prices remain higher than the level personal disposable income, population growth and other fundamentals would support.”
— Bob Dugan, Chief Economist, Canada Mortgage and Housing Corporation
Robyn Adamache “We see strong evidence of overvaluation in Vancouver’s housing market. Single detached home prices are higher than levels supported by economic fundamentals and inventories of new and resale homes are declining while demand remains high. We’re also keeping an eye on overheating and price acceleration which are slowly advancing but evidence of these conditions remains weak. Overall, we see moderate evidence of problematic conditions in Vancouver.”
— Robyn Adamache, Principal Market Analyst (Vancouver), Canada Mortgage and Housing Corporation

Information on this release:
Jonathan Rotondo, Media Relations

CMHC Media Content

  • National Video Clip - English (9.70 MB)
  • Calgary Video Clip - English (9.06 MB)
  • Montreal Video Clip - English (4.00 MB)
  • Toronto Video Clip - English (6.81 MB)
  • Vancouver Video Clip - English (9.15 MB)


CMHC’s HMA analytical framework is designed to evaluate the extent to which there is evidence of problematic housing market conditions in Canadian housing markets. The framework assesses housing market conditions and considers the incidence, intensity and persistence of four main factors:

  1. Overheating of demand in the housing market, wherein demand significantly outpaces supply.
  2. Acceleration in house prices, which could be partially reflective of speculative activity.
  3. Overvaluation in the level of house prices, which indicates that house price levels are not fully supported by fundamental drivers such as income, mortgage rates and population.
  4. Overbuilding of the housing market, which suggests that supply significantly outpaces demand.

Each of these factors is measured using one or more indicators of housing demand, supply and/or price conditions. Table 1 outlines the results from the previous release in January 2016 and the current April 2016 release.

Table 1: Comparisons between January 2016 and April 2016
  Overheating Price Acceleration Overvaluation Overbuilding Overall Assessment
  Jan. 16 Apr. 16 Jan. 16 Apr. 16 Jan. 16 Apr. 16 Jan. 16 Apr. 16 Jan. 16 Apr. 16
St. John’s                    
Evidence of problematic conditions

Note 1: Colour codes indicate the level of evidence of problematic conditions. The HMA reflects a comprehensive framework that not only tests for the presence or incidence of signals of potentially problematic conditions, but also considers the intensity of signals (that is, how far the indicator is from its historical average) and the persistence of signals over time. Generally, low intensity and persistence are associated with a lower potential of upcoming problematic conditions. As the number of persistent signals increases, the evidence of a problematic condition developing increases.

Note 2: Results at the CMA level are not segmented by housing type or neighbourhood. They represent an assessment of the entire CMA. However, specific CMA reports provide further detailed analysis of these markets.

Note 3: The colour scale extends to red only for those factors that have multiple indicators signaling significant incidence, intensity and persistence of potentially problematic conditions. As a result, only overvaluation and overbuilding can receive a red rating, since they are assessed using more than one indicator.

Note 4: To ensure the framework is as current as possible, on a regular basis, we undertake a model selection process whereby our house price models for overvaluation are tested for statistical significance at the national and CMA level. The result of this process may change the number of indicators of a problematic condition from the previous assessment.

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Date Published: April 27, 2016