The Canada Mortgage and Housing Corp. has finally determined that Vancouver’s real estate prices are “overvalued”. The housing corporation has consistently refused to peg the sky-high housing market on the west coast as excessively frothy or due for correction. It contends that underlying fundamentals justify and support Vancouver’s crazy housing prices, and earlier this week, CMHC officials asserted the region offers a range of affordability in its housing stock. …
Interest rates, and thus mortgage rates, are expected to start rising in late 2016, “contributing to a modest slowdown in housing markets”.
Note the adjective “modest”. CMHC explains: “Underlying fundamentals suggest that the demand will be well supported going forward (with sales) likely to retreat slightly to still-elevated levels, while prices are expected to increase at a slower pace over the forecast horizon.”
So, housing prices that have grown by 9.2 per cent this year are expected to increase only by three per cent next year, and 2.1 per cent the year after.
After 15 years of almost uninterrupted bull, few are ready for even the slightest pullback in housing prices in Vancouver. – ed.