OTTAWA — Canada Mortgage and Housing Corp. says there was some evidence of overvaluation in Canada’s housing market this spring amid the COVID-19 pandemic.
The Crown corporation says in cities such as Victoria, Moncton and Halifax, there was a widening gap between the selling price of houses and the price economists would expect, based on population growth, disposable income, mortgage rates and employment.
That data comes from the agency’s housing market assessment, which gives the housing market a grade based on whether homebuilding and rising prices could ultimately affect the stability of the economy.
CMHC says there was a “moderate degree of vulnerability” in the housing market as of the end of June, the same grade the market received in February.
The preliminary report shows the slowdown during the height of COVID-19 lockdown measures, but doesn’t include the record-setting home sales in July and August — nor does the data reflect the ending of government income supports and mortgage payment deferrals.
CMHC economist Bob Dugan says that — despite giving the housing market a steady grade this summer — CMHC still expects a severe decline in home sales and in new construction to come as the economy recovers from the pandemic.