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CMHC Says This; All Points Says That (11 Real Estate Markets to Watch for your relocations; plus bonus small town commentary).

May 20, 2015:

On April 30, CMHC released its House Price Analysis and Assessment Framework for Canada. Our Relo-lert summarizes CMHC’s comments, but we also add our own two cents so that you can stay on top of your domestic Canadian mobility. In short, we recommend that corporations take more time than usual sensitizing themselves to the accuracy of appraisals for Guarantee Home Sale programs and temporary accommodation extensions on regular relocation programs, due to employees taking longer to sell their homes.

City/Area CMHC Comments/Assessment All Points’ 2 Cents
National Low Risk — At the national level, modest overvaluation is observed, meaning house prices are slightly higher than levels consistent with personal disposable income, population growth and other factors. Overheating, acceleration in house prices and overbuilding are not a concern at this time. national

Real estate markets are regional. From a relocation perspective we don’t recommend that HR’s concern themselves very much with national averages.

 Vancouver Low Risk — Despite high Vancouver home prices, CMHC does not see Vancouver as a significant risk. Vancouver

Wow, we don’t agree. Royal LePage’s most recent survey suggests that the average home price is $1.27 million and prices have risen 12.5% from April 2014 to April 2015.

Have salaries raised 12.5% in the last year? Any property in greater Vancouver is an inventory risk if not marketed and priced well. Appraisal accuracy is absolutely essential.

Calgary Low Risk — CMHC feels that there is low risk to a large correction. The reason, however, is because they see a slowdown in the rate of price growth, which will taking any chance overheating out of the equation. Calgary

Pricing Right is a Must!

We don’t really agree. This market is currently sensitive at the higher prices. CREB recently noted that the sluggish oil prices have finally started to show up in a housing price decline. The average price for detached homes fell 0.7% from March 2015 to April 2015. This is one data point, but we view the market cautiously. Properties that are in close proximity to new construction developments will be challenging to sell and we expect the challenges to shift down from the higher priced homes into other categories.

Appraisers are likely adjusting to the market softness, but there is risk of many Calgary appraisers not having any experience forecasting for declining markets and many Realtors are likely to “buy” listings with unrealistic price recommendations that could cause problems during a relocation.

As with any Canadian market, languishing properties should be aggressively market in September / October in order to avoid 2015/2016 market softness.

Edmonton Low Risk — CMHC only predicts a slowdown in price growth. Calgary

CMHC rightfully points out that Edmonton home prices did not rise at a Calgary-type pace over the last number of years. There were fewer home sales this April on a year over year basis, but as a whole the market is probably not going to see much price decline. We suspect, however, that pricing should be very accurate, particularly at the higher end of the market or for those properties that are not as turn-key as others.

As with any Canadian market, languishing properties should be aggressively marketed in September / October in order to avoid 2015/2016 market softness.

Saskatoon Low Risk Calgary

There is a lot of inventory, so appraisals and Realtors’ reports should reflect new home construction competition. Well marketed homes in popular areas are likely to sell well as can condominiums due to demand from younger demographics. However, price point accuracy is crucial.

As with any Canadian market, languishing properties should be aggressively marketed in September / October in order to avoid 2015/2016 market softness.

Regina High Risk — Strong price growth in recent years has led to price acceleration. The inventory of completed and unsold units is at a record high. Regina

Accurate appraisals are crucial, as are Realtor reports. Reports should reflect local competition in both new construction and resale markets. Single family homes are not much of a threat but still should be priced right. Condos are lasting longer on the market and this will continue, if not worsen.

As with any Canadian market, languishing properties should be aggressively marketed in September / October in order to avoid 2015/2016 market softness.

Winnipeg  

High Risk — Risk of overvaluation reflects relatively more modest gains in income than in house prices. Also, the number of units under construction and the number of completed and unsold units are high.

Regina

Accurate appraisals are crucial, as are Realtor reports. Reports should reflect local competition in both new construction and resale markets.

As with any Canadian market, languishing properties should be aggressively marketed in September / October in order to avoid 2015/2016 market softness.

Toronto Moderate Risk — Risk of overvaluation is due to steady price growth that has not quite been matched by growth in personal disposable income. Condominium units under construction are near historical peaks. Inventory management is necessary to make sure that the currently elevated number of condominium units under construction does not remain unsold upon completion. Vancouver

There is no such thing as one Toronto market. Toronto Central market is hot for single family homes and increases can only go on so long. Central condominiums seem to continue the upward climb, but everyone should be concerned with a possible correction. We would not want Toronto condo inventory by November 2015, as it may be longer to sell during the winter, if not aggressively marketed.

The suburbs are not all created equally. Popular suburbs are still popular.

Homes that are less turn-key or in unpopular areas must be marketed aggressively.

Ottawa Low Risk — Due to recent moderation in price growth. Vancouver

Ottawa homes should always be appraised carefully. Ottawa homes have been on a small slide recently, so appraisers should be forecasting slightly declining markets. Realtors that “buy” listings will be creating problems for homeowners trying to sell their properties.

As with any Canadian market, languishing properties should be aggressively marketed in September / October in order to avoid 2015/2016 market softness.

Montréal Moderate Risk — Risk of overvaluation reflects slower growth in first time home buyer demand combined with house price growth exceeding growth in personal disposable income since 2004. Condominium units under construction are near historical peaks. Montréal

Montreal has had a decent history of price growth, which is always a concern in this market that can quickly show fragility depending on Quebec’s politics. Younger demographics have made condo living in central Montreal more popular, but CMHC feels this won’t continue. In fact, we already see softness in the condo market.

As always with Montreal, location matters big time. South Shore properties cannot be marketed at unrealistic prices. Those properties that do not show well or are in unpopular locations are likely to be difficult to sell.

Appraisals and Realtor reports should be reviewed very carefully.

As with any Canadian market, languishing properties should be aggressively marketed in September / October in order to avoid 2015/2016 market softness.

Halifax national

Halifax is definitely a place that is defined by location, location, location. Areas that are less popular such as some within Dartmouth will be challenging as per usual, but the Halifax markets seem pretty healthy. Bedford is also chalenging.

As with any Canadian market, languishing properties should be aggressively marketed in September / October in order to avoid 2015/2016 market softness.

St. John’s Low Risk — House prices accelerated in 2012-2013 but have recently moderated. Montréal

We can’t totally agree with this from a relocation perspective. St. John’s market is always threatened by the vagaries of early and late winters. The market is healthy, but with it being a smaller city affected by oil markets, we would recommend aggressive marketing at all times.

We would be concerned that appraisals should be reviewed carefully, and Realtors “buying” listings could cause marketing problems quite quickly.

Countrywide Smaller Markets NOT MENTIONED BY CMHC All small markets in the west should be viewed with caution. Smaller markets are more susceptible to price declines with outbound relocation of personnel and greater impact of layoffs.

Smaller eastern markets are patchy. Southwestern Ontario markets can be generally healthy if the local economy is healthy, such as areas like Guelph or they can be troubling if the local economy is not healthy, such as Windsor or Chatham. Smaller markets in Quebec are viewed as challenging. New Brunswick cities are generally healthy.

Posted on May 20, 2015 in Relolert

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