Calgary real estate has 'moderate' overvaluation risk but 'weak' evidence of bubble: CMHC

There is some evidenceCalgary homes are overvalued but theCanada Mortgage and Housing Corporation (CMHC) saysbroaderreal-estate conditions are unlikely to be problematic to the point of a housing bubble.

"There is moderate evidence of overvaluation detected as house prices posted robust gains in the last couple of years while growth in personal disposable income has recently slowed down," readsthe latest CMHCHousing Market Assessment report, released today.

"Due to low oil prices, economic conditions have moderated, which has limited growthin employment and income, as well as reduced net migration."

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Overall, however, the report says there is "weak evidence of problematic conditions" in Calgary's housing market.

In preparing itsHousing Market Assessment, the CMHClooks at things like population growth, changes in personal disposable incomeand interest rates, in addition to localdevelopments in the home construction and resale markets.

It then rates the evidence of problematic conditions in five areas: overheating, price acceleration, overvaluation, overbuilding, and overall assessment.

The only warning sign for Calgary was in the overvaluation category, which was rated as moderate, the same rating the CMHC assigned the city in that category inAugust.

Vancouver, Edmonton, Saskatoon, Regina, Winnipeg, Ottawa and Halifax also had moderate ratings for overvaluation, while Toronto, Montreal and Quebec City were rated as high.

CMHC says the framework was developed "on the basis of its ability to detect problematic housing market conditions in historical data, such as the house price bubble Toronto experienced in the late 1980s and early 1990s."