MNI POLICY: Toronto Housing No Longer Highly Vulnerable: CMHC

--Vancouver Taken Off High-Risk List In August By Federal Housing Agency

By Greg Quinn

     OTTAWA (MNI) - Toronto no longer has a highly vulnerable real estate

market, Canada's federal housing agency said Thursday, a week after the central

bank avoided cutting interest rates to avoid creating new froth in such markets.

     Canada Mortgage and Housing Corp. lowered Toronto's risk grade to

"moderate" from "high", saying prices are moving back more in line with economic

fundamentals. The Ottawa-based agency already took Vancouver -- the other city

that drew attention from regulators and global investors -- off the high-risk

list in August.

     "This reduced vulnerability results from an easing in the overvaluation

rating from moderate to low as house prices continued to evolve more in line

with housing market fundamentals like personal disposable income, population and

interest rates," the CMHC report said about Toronto. 

     Annual price gains in Vancouver and Toronto surged to as much as 30% in a

recent housing boom, forcing policy makers to step in with foreign buyer taxes

and tougher mortgage rules. The BOC held a 1.75% overnight lending rate last

week, resisting global pressure related to trade tensions, and said part of the

reason was the potential to trigger a new wave of homebuying among

highly-indebted consumers. 

     Nationwide housing vulnerabilities remained moderate for a third straight

quarter in the CMHC's Housing Market Assessment, following 10 prior reports with

an overall high rating. The report tracks 15 major cities for overheating, price

acceleration, overvaluation or overbuilding.

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

[TOPICS: MACDS$,M$C$$$]