Is That Dreaded Housing Crash Actually Imminent in Mississauga?

When home prices, which had been sitting at record heights for months, declined a little in May, a burning question was asked:

Is this the start of the housing crash?

Some metrics are (and have been) mildly concerning. According to recent International Monetary Fund and Bank of Canada reports, the health of the country's economy hinges quite heavily on the strength of the housing market and many homeowners—especially younger ones—are overleveraged and spending an alarmingly large chunk of their take home pay on home expenses.

But while it is true that the market has been astronomically hot and that wages have not kept pace with escalating housing and living costs, it doesn't look homeowners—or those who worry about unsustainable mortgages—need to worry about losing their homes and throwing Canada into a recession while they're at it.

According to a recent Canada Mortgage and Housing Corporation (CMHC) report, mortgage delinquency (people failing to pay or walking away from their homes) rates are low.

To be fair, delinquency rates are up in more oil-dependent regions such as Edmonton and Calgary. That said, the rates are low where the housing market is hottest—Toronto and Vancouver.

The analysis is part of CMHC's Homeowners' Debt at a Glance, a series of "quick-read" analyses of consumer credit data from the credit reporting agency Equifax focused on homeowners, mortgage holders and potential homebuyers' debt and credit use.

While the news is encouraging, the CMHC was careful to point out that there are "data gaps" preventing them from having a complete picture of Canada's housing and mortgage markets.

"We know there is a need for more reliable data to help policy makers analyze the key concern of rising household debt in Canada," says Maxim Armstrong, Senior Statistical Reseacher, CMHC. "The Equifax data allows us to expand our analysis beyond mortgages insured by CMHC and provide a level of detail never before available."

Gaps aside, the report reveals that from the third quarter of 2012 to the fourth quarter of 2016, Canada's mortgage market remained stable and mortgage delinquency rates and the share of mortgages granted to higher risk borrowers remained low and stable in 2016.

Interestingly enough, Vancouver and Toronto continue to record some of the lowest delinquency rates in Canada.

So is a crash imminent?

No one has a crystal ball, but it doesn't appear that a U.S.-style meltdown is in cards for the entire country. It's probably prudent for Mississauga and other government partners to focus on protecting and producing affordable housing in a generally hot market rather than fret over the overblown (it seems) threat of a sudden crash.

Because even if houses lose some value in Mississauga over the summer, it's unlikely they'll suddenly become "affordable" any time soon.

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