WinnipegREALTORS® is in lockstep with Mike Moore and the MHBA (Manitoba Home Builders’ Association) on CMHC’s (Canada Mortgage and Housing Corporation) new Housing Market Assessment (HMA) model. Quite frankly, we feel it is unnecessary given how well their own local market and regional economists do in providing solid and complete housing market information on all aspects of the housing market.
Here are some excerpts from Mike Moore’s article on HMA in last Saturday’s Winnipeg Free Press Homes:
“The Canada Mortgage and Housing Corporation promotes itself as being Canada’s national housing agency for almost 70 years. Many Canadians would have never realized the goal of home ownership without the assistance of CMHC. They provide terrific research and are always willing to present market information to interested parties.
“So why do they seem so intent every quarter to create panic in Canada’s housing market?
“Last week, the CMHC published the fourth quarter assessment for Canada and 15 major urban markets. I think we all expected Vancouver and Toronto to be red-flagged for overvaluation. Both cities have been the subject of considerable discussion regarding rapidly increasing home prices to the point of the federal government making changes to the mortgage rules solely because of circumstances in two cities.
“Looking at the other 13 cities, not much has changed since last quarter. In fact, the overvaluation situation in Saskatoon has lessened. I do note that price acceleration in Hamilton and Victoria has increased slightly over the past three months. In fact, Hamilton is the only city that has had its overall assessment change rating colours since last quarter.
“So is that enough of a change for the CMHC to now declare that Canada as a whole displays strong evidence of problematic conditions? According to this assessment report, the concerns that are being found in Canada’s two primary urban centres are spreading to other communities nearby.
“It is interesting to note that if Toronto and Vancouver were excluded from the study, then the increase in house prices across the country would have only been six per cent as opposed to 11 per cent. In fact, breaking it down further, if one excludes Ontario and British Columbia, house prices decreased by three per cent across the eight other provinces combined. Once again, two provinces and two cities appear to be all that counts in assessing an entire country.”
As was just indicated in our October MLS® market release, there is no one national housing market. All markets are local with their own unique and varied market forces at play. Even within local markets there can be quite a variance in metrics depending on property type, price range and area of the city or outlying rural municipalities.
Why CMHC chooses to grab headline news to say Canada shows strong signs of problematic conditions is a problem in itself — alarmist to some extent, especially if you are living in more stable markets such as Winnipeg or in slow markets like the Maritimes.
As for individual market ratings in their four measurable factors of overbuilding, overheating, price acceleration and overvaluation, Winnipeg, despite having three green codes, or low evidence of problematic conditions, ended up receiving an overall moderate rating because overbuilding is moderate due to some oversupply in condominium construction. Yet, CMHC acknowledges inventory of unsold units has declined substantially since the beginning of the year.
And to call an entire housing market moderate due to one property type that has a far lesser footprint on our city or rural municipalities than single-family homes is questionable. Local market analysts in their own reports state that condominium supply is still elevated compared to average norms. But to use that one weakness in a market such as ours and ascribe to our housing market an overall rating of moderate evidence of problematic conditions is highly questionable and disappointing.
WinnipegREALTORS® has certainly experienced a strong rebound in condominium sales this year compared to 2015, so the association is confident overbuilding will be self-correcting over time.
And if you think WinnipegREALTORS® tries to inflate the MLS® market with hype and exaggerated claims that’s not the case. Local market analyst Peter Squire is quite conservative in his estimation of how well the MLS® market will perform every year.
This year is no different.
MLS® market activity is exceeding his January forecast, which, while positive, indicates Squire did not anticipate a record year was in the works.