Canada is, without a doubt, going through some crazy times when it comes to housing. And, a recent report from a major American financial services company has found a wild range between the most under and overvalued cities in Canada. We’re talking about everything from 30% under fair value to 90% over it. Let’s check it out!

Moody’s Analytics, which is a subsidy of the credit rating powerhouse Moody’s, recently released its October report on the Canadian housing market. The consensus? While regions vary wildly, Canada on the whole is overvalued by about 22%. But, don’t expect things to change any time soon.

Canada’s most overvalued cities

toronto skyline overvalued cities canada
Toronto city at sunset, Ontario, Canada

Let’s start with the overvalued stuff. Turns out that Ontario is home to the most overvalued regions in Canada, according to the report. The Greater Toronto Area is sitting at around 39% over the ‘trend price’, but that’s nowhere near some other areas. Hamilton, for example, is around 73% over the trend, while the St. Catherines-Niagara region is an eye-popping 91% (!!!) over. We guess people love the falls and the wine, what can we say?

Ironically, British Columbia trails Ontario in the report, even though Vancouver has been named the least affordable city in North America. Metro Vancouver sits at a (weirdly reasonable?) 23% overvalued, trailing Abbotsford (35%) but more than nearby Victoria (16%). Want a steal in BC? According to Moody’s you’ll find it in Kelowna, which is only 3% over.

If you were hoping that this means price corrections are coming, don’t read this paragraph. While Moody’s is suggesting that rising mortgage rates over the next couple of years will put downward pressure on prices, the report is suggesting that home prices will continue to grow, albeit at much lower percentages (under 5% across the board for the above areas).

In fact, if you’re trying to time a price correction (AKA catch the knife, which we’ll admit is not good financial advice) your best bet is Montreal. Sitting at 25% over trend prices, this is the city Moody’s anticipates will see falling home prices. Pretty big ones, too- at least 5% next year, and at least 7% the year after.

Canada’s most undervalued cities

calgary skyline undervalued cities canada
Photo via Shutterstock

On the flip side, the Prairies and Atlantic Canada are reportedly undervalued, and by no small margin. Calgary and Edmonton sit at a dismal 31% and 30% undervalued, making them two of the cheapest cities in all of Canada. Only Saskatoon, at 32%, sits below them. Wowza!

The good news there, we guess, is that it makes them more attractive to prospective buyers. Both cities are expected to outpace Vancouver and Toronto over the next couple of years, with around 8% price growth projected for 2022 and 9% or more in 2023. This is kind of the reverse of catching the knife, by the way, so keep that in mind if you’re looking to move somewhere new in Canada. Of course, we’re not financial advisors, so take all of this with a grain of salt.

So what now? Well, if you’re really keen to know more, then click the link above to check it out straight from the horse’s mouth! Canada’s housing market has been on one for years, and we don’t think it’s calming down anytime soon.