Strong evidence Toronto housing market is overvalued, says CMHC

Toronto, April 29 (CINEWS): The warning signs are all there, bidding wars are erupting over even the shabbiest, mold -infested homes in the GTA. Home inspectors and home stagers are struggling in a market when most home bidders are waiving their rights to a home inspection and home sellers don’t need to impress buyers/investors by employing home stagers. CMHC, Canada’s national housing agency now cautiously states that says nine of Canada’shousing-recovery 15 largest housing markets show signs of overvaluation- Vancouver, Toronto, Edmonton, Calgary, Saskatoon, Regina, Hamilton, Montreal and Quebec City.
These are the factors that raise red flags for the agency:
• Overheating — when demand is significantly and persistently outpacing supply
• Overvalued — when prices are higher than they should be based on economic fundamentals
• Accelerating — when house prices are increasing faster than household costs of living are
• Overbuilding — when supply of new homes significantly outpaces demand.
Across the country, Canada’s housing market set a record last month both in terms of prices — an average of $508,567, and the volume of sales, CREA said.
Fuelling demand is foreign money sloshing around and isn’t just Chinese investors eyeing investment properties in Toronto and Vancouver in particular, South Asian investors are also buying properties through their Canadian-based families. As long as CMHC insures home loans, banks will continue sanctioning loans with alacrity to home buyers are happily taking on larger debts because of low interest rates on the assumption that prices and realtors/ property investment consultants are telling clients they can become millionaires by investing in a second property in 15 years even if interest rates rise to 4 per cent, this is prompting a record number of home owners are becoming second home owners.
With CHMC stating that the Toronto market is overvalued and at the same time adding there is no need for undue concern, the takeaway is this-Nothing to worry about now, but if anything goes wrong, don’t say we didn’t warn you.

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