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Housing market ‘modestly’ overvalued, CMHC says

House prices in parts of Canada may appear to be increasingly out of reach for many Canadians, but lofty prices aren’t about to sink any time soon.

In fact, Canada’s homes are only “modestly” overvalued on average, Canada Mortgage and Housing Corp. says in an analysis, and there is no evidence that any dramatic reversal is in the cards.

Over all, “there is little risk of a housing price correction,” CMHC chief economist Bob Dugan says. “There is only a modest amount of overvaluation, and other risk factors don’t seem to be present now in Canada.”

Nationally, house prices are only slightly higher than where they should be relative to disposable income and population growth, the study shows. Overheating and price acceleration are also not a concern on a national basis.

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