Canada’s housing market is not in bubble territory and faces “very little risk” of a downturn, according to a new analysis of eight major urban centres released Monday by the Canada Mortgage and Housing Corporation.

Its chief economist cautioned, however, that the “very positive assessment” is based on a “backward-looking” examination of housing prices and underlying fundamentals in Toronto, Vancouver, Calgary, Edmonton, Ottawa, Montreal, Quebec City, and Halifax.

“When we do this kind of analysis … it assumes that the world of the future will unfold much like it did in the past and, of course, there are dangers about driving while you are looking in the rear-view mirror,” CMHC chief economist Bob Dugan told reporters Monday.

The House Price Analysis and Assessment Framework, a first for CMHC and which it hopes to expand over time to look at other Canadian communities, evaluates house prices against four risk factors: overheating demand, price acceleration, over valuation (pricing) and over building.

It found that, overall, Canada’s housing market appears to be relatively healthy, despite some “moderate risk of overvaluation” in major urban centres like Toronto, where wages have lagged house price growth.

The federal housing agency does, however, issue a “cautionary note” for Toronto — and Montreal — warning that “the number of (condo) units under construction is elevated in those centres.”

Overbuilding remains a big enough risk in those two markets that developers need to “hit the appropriate balance” and be cautious in going ahead with too many new projects before the unsold inventory has been tackled.

“At the national level, other than a modest amount of overvaluation, we do not detect the presence of other risk factors such as overheating, price acceleration, and overbuilding,” said CMHC’s Dugan.

“Risk of overvaluation is most evident in Montreal and Quebec, but the trend is improving. A modest risk of overvaluation is also present in Toronto, Calgary and Halifax. Across the 8 CMAs examined, there is no overheating or acceleration.”

The modest overvaluation in Toronto, while largely the result of the disparity between average incomes and average home prices, isn’t the only concern, according to the report.

(Resale prices — for houses and condos combined — hit an average of $587,505 in October, up almost 9 per cent year over year.)

“The level of units under construction relative to population is near historical peaks — inventories need to be managed.”

But the report goes on to note that the number of completed, but unsold, condos across Toronto, as well as the rental vacancy rate, “are both below their historical averages.”

There are currently some 16,210 unsold units in condo projects in the sales, construction or occupancy stages across the GTA, notes Shaun Hildebrand, senior vice president of condo market research firm Urbanation.

That’s been dropping from the spring 2013 high of 19,394 as developers have stepped up discounts, cash-back and other incentives to ease the backlog to its current record low, said Hildebrand. The number of unsold condos dropped 11 per cent in the third quarter of this year alone, he says.

Some 84 per cent of condos now in the sales, construction or occupancy stages across the GTA have been presold, Hildebrand added. That’s a record high. And developers have an average of more than two years to sell the rest before the project starts occupying.

Toronto does have some notable upticks that reduce possible risk to the housing market, says the CMHC report. House price growth has been moderating since 2013, plus incomes are increasing, as is the contingent of 25- to 35-year-olds, key first-time buyers.

Canada’s most-watched and debated housing market, Vancouver, rates as a “low risk” in the CMHC study of house prices relative to underlying demographics and economic impacts, such as unemployment and interest rates.

In what will surely come as a surprise to many housing watchers, CMHC finds that Vancouver prices are “supported by local growth in personal disposable income and long-term population growth.”

Calgary, considered among the “Hot 3” of Canada’s housing markets (the others being Toronto and Vancouver) also rated as a low risk, with any overvaluation simply a result of modest gains in personal income.

Dugan acknowledged, however, that the Canadian market continues to send “mixed signals”: While supply and demand have been largely balanced across the country since 2010, house prices have risen an average of 6.9 per cent, more than triple the average 1.9 rate of inflation.