CMHC assessment surprises Vancouver agents
October 11, 2021
The average home price in Vancouver is $1.1 million—highest across Canada—and the local real estate board reports the number of listings have crashed to 40-year lows.
Yet, the third quarter 2021 Housing Market Assessment from Canada Mortgage and Housing Corp. (CMHC) assessed Vancouver as having a “low degree of vulnerability” in the housing market, along with Saskatoon, Regina, Winnipeg and Quebec City.
“Vancouver’s rating was reduced from a moderate to low degree of market vulnerability. Price growth has settled down in Vancouver as the pace of sales in the market has slowed. Homeowners have listed their homes in larger numbers than usual, easing the competition among buyers,” according to a CMHC statement.
But, according to the Real Estate Board of Greater Vancouver (REBGV) active listings have plunged 30 per cent year-over-year to levels last seen in 1994. Meanwhile, sales in August 2021 were 3.4 per cent higher than a year ago, and the benchmark price was up 13.2 per cent from August 2020 and up 1.3 per cent from July 2021.
The shortage of listings, according to REBGV economist Keith Stewart, is the “biggest factor impacting the market right now. The market needs a more abundant supply of homes for sale.”
The low ranking was new for Vancouver, which was previously said to have a moderate vulnerability level.
Some realtors expressed surprise Vancouver would be considered by CMHC as being “not vulnerable” to market gyrations given its extremely high prices and low supply.
CMHC explained that its quarterly assessment assigns low, moderate or high vulnerability ratings in 15 major cities based on four factors: overheating, price acceleration, overvaluation and excess inventories.
“If those factors become imbalanced or risks increase in several areas at once, the agency posits that markets could be more vulnerable to troubles and people could begin struggling with their mortgages,” according to a CMHC statement.
The Greater Toronto Area remained at a high degree of market vulnerability. “ Despite existing home sales starting to ease and pandemic-induced buying activity dissipating during the second quarter of 2021, the demand-supply imbalance in the Toronto market for existing homes contributed to the persistence of price acceleration,” according to CMHC.