CMHC raises its overall risk rating for national housing market to strong

TORONTO – Canada's federal housing agency says there is rising evidence of risk in the country's real estate markets as home prices have climbed faster than income and population growth.

Canada Mortgage and Housing Corp. has increased its risk rating for the national housing market to strong, from the moderate rating that CMHC gave in July.

It cites continued overvaluation, which means that home prices are not fully supported by economic fundamentals such as income, mortgage rates and population growth.

It also finds evidence of price acceleration. That occurs when home prices go up at a faster pace and a possible sign of speculation as properties are bought and sold for profit.

CMHC is also predicting that the pace of new housing starts will decline next year before stabilizing in 2018.

CMHC CEO Evan Siddall said earlier this month that the housing agency would raise its risk rating to strong for the first time ever when it releases its quarterly housing market assessment.

The housing market assessment is intended to be an early warning system to alert Canadians about problematic conditions developing in the country's real estate markets. It covers 15 regional markets and the national housing market as a whole.

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