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The Canada Mortgage and Housing Corporation ( CMHC ) complex in Ottawa.Sean Kilpatrick/The Globe and Mail

Housing markets across the Prairies are showing major signs of stress as job losses mount in the energy sector and rental vacancy rates soar, Canada's federal housing agency has warned.

Over all, Canada's housing market faces little risk of a steep correction, Canada Mortgage and Housing Corp. said in a new quarterly assessment, although it raised concerns with nine of the country's 15 major housing markets.

Sliding oil prices are beginning to translate into what CMHC described as "problematic conditions" in housing markets in Calgary, Regina and Saskatoon, potentially leaving those cities at high risk of a home-price correction if conditions don't improve. The federal agency said it found "moderate evidence" of problems in Edmonton's housing market.

CMHC had previously considered Alberta's two major cities at a low risk of a downturn when it last published an assessment about the housing market in October. But it said soaring job losses, a slowdown in migration and surging vacancy rates have raised significant concerns. Resale home prices fell roughly 2.4 per cent in Calgary last year, but CMHC warned the city's housing market was still overvalued.

"Alberta in general and Saskatchewan to some extent is reacting to a fairly significant shock right now," CMHC's chief economist Bob Dugan said of the sharp drop in oil prices since last fall. Vacancy rates in Calgary have jumped since CMHC last surveyed the city's rental market, rising from 1.4 per cent in December of 2014 to 5.3 per cent last month.

Multiple red flags in a region's housing market – in Calgary's case, high levels of rental vacancies coupled with home prices that remain above levels supported by job and income growth – have historically translated into higher claims on CMHC's mortgage insurance, the agency said.

CMHC renewed its warnings about Regina and Saskatoon, where housing markets have been weakening amid falling commodity prices and a high level of new home construction. Resale home prices had dropped nearly 4 per cent in Regina in December compared with a year earlier.

The federal agency also reiterated its warnings about Toronto, thanks to soaring home prices for detached homes that have outstripped incomes. Levels of condo construction are also running ahead of population growth. Despite being home to Canada's most expensive real estate, Vancouver's housing market remains at low risk of a correction, CMHC said.

Mr. Dugan said CMHC's assessment should serve as an "early warning system," alerting buyers, lenders and builders to problems brewing in the housing market in hopes they can avert a serious outcome, such as a major home-price correction.

Toronto

The housing market continues to raise serious red flags, including a surge in prices for detached homes that "has not been matched by growth in personal disposable income and population," CMHC said. Condo construction also continued to run above the long-term average.

Vancouver

CMHC has raised some eyebrows with its assertion that Vancouver's housing market poses little risk of a correction. Average home prices in the region soared nearly 20 per cent last year. Much of the sharp rise in prices came because of the red-hot market for detached houses, which CMHC said were being snapped up by "high net worth" buyers. Roughly 60 per cent of home sales in the region are more affordable multifamily properties, such as condos and townhouses.

Calgary and Edmonton

Calgary's home prices have dropped since CMHC last studied the market, but not by enough to reflect the region's deteriorating economy and the sharp rise in its vacancy rate. Edmonton has fared better, but is coming off a record year for new housing starts that is leaving the city at risk of having a glut of unsold condos and vacant apartments amid an oil slump.

Winnipeg

Winnipeg is the only housing market where conditions have improved since October, ." The region's job market has rebounded since then and a growing pool of first-time buyers is helping to support prices. However, the level of unsold homes under construction is still too high, CMHC said.

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