Winnipeg housing market problematic: CMHC

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This article was published 29/10/2015 (3817 days ago), so information in it may no longer be current.

There is still strong evidence of problematic conditions within the Winnipeg housing market, according to the latest market-assessment report from Canada Mortgage and Housing Corp. (CMHC).

In is latest quarterly assessment report released today, the corporation says Winnipeg is one of four regional markets where it still detects strong evidence of problematic conditions. The others are Toronto, Regina and Saskatoon.

CMHC considers four factors in assessing the evidence of problematic housing market conditions: overheating; acceleration in the growth of house prices; overvaluation; and overbuilding. It ranks the evidence of problematic conditions as either weak, moderate or strong.

It says that in the case of Winnipeg and Regina, there remains strong evidence of problematic conditions because two of those factors — overvaluation and overbuilding — are still present.

“There continues to be moderate evidence of overvaluation, though recent balanced-market conditions have tempered price increases and employment and earnings are on the rise,” it states.

“The level of evidence of overvaluation reflects the continued effect of past conditions, where house prices rose more quickly than economic and demographic fundamentals.”

In terms of overbuilding, the corporation says there is still a high number of housing units under construction, and a high number of units that remain unsold.

“Continued upward pressure in inventory is expected to be more pronounced in the multi-unit sector, where builders will likely proceed with projects in the planning stages over the next year,” it says. “As such, inventory management is required so that demand is channeled towards these unsold units.”

CMHC drops ‘risk’ in assessments

One of the noticeable differences between this report and previous assessment reports is that CMHC no longer uses the word “risk” in describing its assessment of the conditions in the regional markets.

In its previous quarterly reports, it said Winnipeg was one of the markets where “high overall risk” of problematic conditions was detected, and the suggestion Winnipeg is a “high-risk” market raised the hackles of local housing market officials.

They maintained the market here is neither overbuilt nor overvalued, noting price increases have moderated now that supply and demand have became more balanced.

They also noted local homebuilders have cut production of single-detached homes this year. And while many new condos have been built, Manitoba has a fast-growing population, they said, so unsold units will sell.