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House Value Warning Issued by CMHC

House Value Warning Issued by CMHC

October 12, 2021

A warning has been issued that house prices have become risky for our country, writes Peter Watson.

This information was just released by Canada Mortgage and Housing Corp. It issued its highest risk rating and specifically mentioned three cities, Toronto, Hamilton and Ottawa.

According to the Canadian Real Estate Association, many smaller communities have seen prices increase from 35 per cent to 55 per cent.

The CMHC report said, “exceptionally strong demand and home price appreciation over the course of the pandemic may have contributed to irrational expectations of continued price growth and, in turn, more buyers entered the market than was warranted.”

My concern is that after we emerge from the pandemic, house prices may return to pre-COVID levels.

The CMHC risk rating has implications.

What happens if home values decline and results in the house mortgage being higher than the value of the house? This is a risk for the homeowner and the mortgage company.

High home prices are pushing affordability out of reach for those that want to purchase a house. How are those going to satisfy our national dream of home ownership?

Affordability was a prominent issue in the federal election.

Owning a house has been a good strategy for many that sell the house in order to fund retirement. If you over pay for a house now, will that limit the potential gain when you retire?

Parents have provided funds to children wanting to get into the housing market. Depending on the arrangement within the family, will a housing market correction negatively affect the parent’s well-being and their ability to have a comfortable retirement?

Your house is your home. It is also a potential risk.

Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through