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Canada’s housing agency has added Victoria to its list of real-estate markets with problematic conditions, seeing danger signs in the B.C. capital’s home values.

Canada Mortgage and Housing Corp. said Thursday that it is maintaining its “red warning” for the country’s real estate market as a whole, with prices in and around Vancouver and Toronto among its top concerns.

The agency’s decision to issue the red alert in its overall assessment for the Victoria area has been months in the making. Under the agency’s analysis that looks for “evidence of problematic conditions,” it rates 15 metropolitan markets based on weak (green), moderate (yellow) or strong (red) risk signals.

“Evidence of problematic conditions has increased in Victoria since the previous assessment due to moderate evidence of price acceleration and overvaluation,” CMHC said.

CMHC issued its first national warning in October, cautioning that with many suburbs near Vancouver and Toronto already seeing prices spike, pressure is spreading even farther out as some buyers search for homes in bedroom communities such as Abbotsford (70 kilometres east of Vancouver) and Barrie (90 kilometres north of Toronto).

Abbotsford is located beyond the boundaries of Greater Vancouver while Barrie is outside the Greater Toronto Area. From bedroom communities such as Abbotsford or Barrie, it can take roughly a 90-minute drive to commute to the downtown cores of Vancouver or Toronto, assuming daytime traffic.

Ontario and British Columbia accounted for 66 per cent of last year’s Canadian sales of existing residential properties.

CMHC sees Calgary as a market on the mend while warning signs are prevalent in Victoria and five other markets. “Evidence of problematic conditions has decreased in Calgary since the previous assessment as some housing markets in oil-dependent centres are now rebalancing,” the agency said. “Strong evidence of problematic conditions continue to be detected in Vancouver, Toronto, Regina, Saskatoon and Hamilton.”

Last October, the federal government implemented measures to tighten mortgage lending rules, such as a new standard for gauging whether buyers can handle an eventual increase in interest rates.



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