CMHC Issues Warning About “Problematic” Housing Market

Problems seen in 10 out 15 major Canadian cities.

The Canada Mortgage Housing Corporation continues to issue warnings about the Canadian housing market, and their concerns extend beyond Toronto and Vancouver.

As reported by BNN, “On the whole, the Canada Mortgage and Housing Corporation (CMHC) said there was strong overall evidence of problematic conditions in the country’s housing market, the same threat assessment it gave in its last quarterly report in April.”

The CMHC says the Vancouver market appears to be becoming overheated. In Toronto, they see home prices as overvalued.

Beyond Toronto and Vancouver however, the CMHC sees “strong signs of problems” in five of 15 Canadian major cities. Meanwhile, they see “moderate signs of problems,” in another five. This points to the fact that our dangerous economic reliance on the housing market is not just limited to the two usual suspects.

What goes up, must come down

With housing prices far above any logical level, a price decline is inevitable. With interest rates expected to continue increasing, Canada faces a serious economic problem: Highly indebted homeowners who could simultaneously face higher debt payments and a loss in the value of their homes. That could certainly drive us into a recession, and it shows how dangerous it is for our “leaders” to restrict our tangible economy (energy production, manufacturing), in favour of intangible and unstable sources of “growth” (debt & an overpriced housing market).

Those policies have worked out well for the banks, but not so well for Canadians, and it seems the day of reckoning is drawing closer.

Spencer Fernando

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Shamrock
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Shamrock

I think you will find markets have already begun to correct, though the outlook remains positive where I live in Victoria. Long term homeowners almost always win imho. Corrections are normal and healthy in the environment we’re in. Bubbles are usually self-made by not finding deep value, inadequate or overextended debt servicing, and speculation. High markets always come back to restore value, but the wild card is interest rates and big government, who’s statist elements seem intent on helping us by destroying the value of investable assets. How long before they demand a “right” to housing, at a “fair” price,… Read more »

Len
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Len

And when JT has the country teetering on the verge of bankruptcy (which won’t be far off at the rate he’s throwing our money all over the world), won’t it be a lovely time for a big financial “correction” …?? Thanks so much, brainless selfie-boy!

ninetyninepct
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ninetyninepct

What exactly does the CMHC do?? As I understand, we pay a massive insurance premium to them which theoretically covers us ( because we pay the fee ) in the event we can’t make the mortgage payments. CMHC takes a piece of the pie for no risk. The banks take the rest of the pie as security on the mortgage. In the event of a default, CMHC gives the bank a lot of money, the bank takes the house away and sells it and only we lose. With car insurance, if we have an accident, the insurance pays and we… Read more »