The federal agency monitors housing markets across Canada in four areas: overheating, price acceleration, overvaluation and overbuilding. CMHC defines vulnerability as imbalances in the housing market.
“Imbalances occur when overbuilding, overvaluation, overheating and price acceleration – or combinations thereof – depart significantly from historical averages,” it said.
For both Calgary and Edmonton census metropolitan areas, the degree of vulnerability was considered low in overheating, price acceleration and overvaluation. For both areas, it was considered moderate for overbuilding.
The results are based on data to the end of December 2018.
Here’s what the CMHC had to say about each market:
Calgary: Moderate degree of vulnerability
Moderate evidence of overbuilding in Calgary continues to persist. Builders are generally slowing down production in the ownership market, however new home sales continue to decrease at a faster rate. The exception is condominium apartments, where inventories have been trending downwards since their peak in December 2017.
Prospective buyers in Calgary face a number of demand headwinds, such as a high unemployment rate, a lack of growth in inflation-adjusted personal disposable income, and higher interest rates, prompting buyers to seek lower-priced options in the market.
Edmonton: Moderate degree of vulnerability
Moderate evidence of overbuilding continues to be observed in Edmonton. While the rental market has begun tightening in Edmonton, the imbalance between supply and demand in the ownership market widened. The pace of absorptions has been below new home production levels, pushing inventories higher. Completed and unsold units (per 10,000 population) reached 17.9 in the fourth quarter of 2018, just shy of the all-time high of 18 in 1995.
As of February 2019, 61 per cent of the total single- and semi-detached inventory in Alberta’s seven largest markets combined were in Edmonton.
– Mario Toneguzzi