Housing Market in Canada Having Problems? Experts Tell What Is the Reason for That

When it comes to the Canadian housing market, there is a specific problem that can cause trouble for it. According to CBC, an overvaluation of many housing properties in the market is the one to blame. A report from Canada Mortgage & Housing Corp., or CMHC for short (a government agency), has stated that the said problem caused bad effects within the market.

There was a notable widening gap in the market, between the selling prices and expected prices. The widening gap was very out of place by the experts' calculations based on the following factors:

• Employment rates
• Mortgage rates
• Disposable income
• Population growth

Do take note that the report is based on the assessment of the said agency wherein it is used to base if the housing market is doing well or not. The stability of the housing market in the country will surely affect the overall economy as well.

The agency has stated that the overvaluation problem, caused a vulnerability within the Canadian housing market, as a result. This was seen last June of 2020, wherein in the same year, it was found beforehand in February.

Even though the lockdown restrictions are slowly being eased in the country, the report still stays the same. It will be still the same even if the record-hitting sales from the months of July and August were included. Additionally, the report doesn't include income support from the government and deferral payments from mortgages either.

The experts in the said agency are expecting a decline in the housing market that can be severe. This is due to the recovering economy, wherein people are not willing to spend more than what they currently have during a pandemic.

Other Sources Agree With CMHC's Housing Market Report

Not only the CMHC itself is stating that the current Canadian housing market is vulnerable, but other sources as well. According to CTV News, their economist is sure that the said housing market isn't out of the woods yet. Just last May and June of 2020, they have stated that the housing market is suffering from a steep decline.

Bwalk.com, a Canada-wide rental property management company, says that there is also evidence these trends are affecting Canadian rental apartments. The rental market vacancy rate in the country's big cities edged up to 3.2 per cent in 2020 from two per cent in 2019.

The cause of the said decline is due ot the record-low housing prices, which gave a negative effect in the market. This is a clear contrast to what happened next in the following months of July and August, wherein it was recorded to have a high home sales and prices. The experts say that this is not a good outlook for the market as a whole and cannot be viewed as a positive result. They are still sticking to their predictions that the Canadian housing market is not yet in the clear at all.