Calgary’s housing market is not under threat of a correction despite a downturn in the local economy, Canada Mortgage and Housing Corp. said in an analysis Thursday

THINK OUTSIDE THE BOX:  Don Campbell, senior analyst with the Real Estate Investment Network, said Calgary’s low-risk rating was interesting given the year-long decline in oil prices that could cause the local market to become “more volatile.”

Its assessment of 15 metro markets lists Calgary as “low risk” while Toronto, Regina and Winnipeg were rated “high risk.” The review considered four factors — overheating; acceleration in house prices; overvaluation; and overbuilding — as of the end of March.

“The low price of oil has affected many different sectors of the economy, affecting employment and income growth, and increasing the unemployment rate. Weaker labour market conditions have also slowed migration to the region,” CMHC said of the Calgary-area market.

It said acceleration in prices and overbuilding were considered stable, while the threat of overheating had decreased. The risk of overvaluation rose to moderate.

“Given the information we had at that time, we’re seeing a modest amount of overvaluation,” said CMHC chief economist Bob Dugan. “If there were to be some sort of an economic event to cause the fundamentals to change dramatically that could affect our assessment.”

Toronto was added to the CMHC’s list of troubled markets, with rapid price growth and overvalued home prices putting the country’s biggest real estate market at high risk of a correction, CMHC said. Regina and Winnipeg were previously placed in the high-risk category in April.

In Regina, price acceleration, overbuilding in the condo market and overvalued home prices are responsible for the heightened housing market risk, according to the report, although CMHC said price growth is beginning to wane. In Winnipeg, overvalued home prices and overbuilding have been flagged as concerns.

Meanwhile, Vancouver — one of the country’s priciest real estate markets — was deemed low risk, even as home prices there continue to soar. The benchmark price of a detached home in metropolitan Vancouver hit $1.1 million in July, up 16.2 per cent from a year ago, the Real Estate Board of Greater Vancouver said last week.

Don Campbell, senior analyst with the Real Estate Investment Network, said Calgary’s low-risk rating was interesting given the year-long decline in oil prices that could cause the local market to become “more volatile.”

“The lack of rental properties in that mid-range size and price is holding back many people from selling their homes in Calgary, however, as the pain deepens in the oil and gas market, many will be forced to sell as this downturn does not seem to be short in nature,” he said. “This adds risk to average price drops and demand, especially in the coming November to February market window.”

Statistics Canada said Thursday that new home prices in the Calgary area rose 0.1 per cent in June.

“Higher land prices were largely offset by builders reducing prices because of market conditions,” the federal agency said. Prices were up 0.7 per cent year-over-year.

In its latest report, the Calgary Real Estate Board said the average MLS sale price for July was $476,446, down about 1 per cent from a year ago while the median price of $435.000 grew by 2.35 per cent. The benchmark price, which CREB identifies as a typical property sold in the market, was largely unchanged at $455,400.

With files from The Canadian Press

mtoneguzzi@calgaryherald.com

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