05/13/2015 12:00 EDT | Updated 05/27/2015 10:59 EDT

Toronto, Vancouver House Prices Fizzle As ‘Corrections Underway' In Most Markets

So much for Toronto and Vancouver's incredible, incomprehensible house price growth. Prices across Canada are fizzling, and the two hottest (or formerly hottest) housing markets are showing signs of slowdown.

Even oil-price-ravaged Calgary and Edmonton showed stronger house price growth than Toronto and Vancouver in the latest edition of the Teranet/National Bank house price index, which reported overall prices across Canada rising 0.2 per cent in April.

That's the weakest showing for the month in 17 years, if you exclude the recession of 2009.

But underneath the national number, there are only a few strong regional markets holding up many struggling ones.

Prices in Toronto and Vancouver were flat for the month. Prices were up a slight 0.2 per cent in Calgary, though they are still down 0.6 per cent for the year. In Edmonton, prices were up 0.6 per cent, and the city has shown unexpected resilience to the oil price collapse, with prices up 4.7 per cent from a year earlier.

National Bank senior economist Marc Pinsonneault says “corrections” are underway in eight of the 11 regional markets tracked in the index.

The most noticeable of these appears to be in Ottawa, where house prices fell 2.3 per cent in the month, and are down 4.1 per cent for the year.

And the sideways price changes in recent months in many markets mean that prices in nine of the 11 markets are down from their peaks. Only Vancouver and Toronto haven’t peaked:

But according to Capital Economics, prices are, in effect, falling in Toronto and Vancouver. According to the research firm’s own seasonal adjustments of the house price index numbers, house prices fell 0.1 per cent in April in Toronto and a steeper 0.5 per cent in Vancouver.

Seasonal adjustments are done to strip out regular changes in the housing market, such as the fact people tend to pay more for houses in spring than in winter.

“Overall, it now appears that most markets have peaked,” Capital Economics’ David Madani wrote. “The only possible exceptions might be Toronto and Vancouver, where record low mortgage rates are supporting home sales, pushing household debt levels in those regions dangerously higher.”

By Madani’s calculations, prices are also falling in Calgary and Edmonton, where the seasonally adjusted numbers show both markets’ house prices falling 0.4 per cent in April.

Madani also notes that the months’ supply of inventory (which measures the number of houses for sale versus actual sales) hit a record high everywhere except Ontario and British Columbia.

This usually indicates downward pressure on house prices in the near future.

Madani, considered one of the more bearish observers of the housing market, has long predicted a 25-per-cent decline in Canada's house prices, but now estimates the overvaluation at 30 per cent.

Still, he expects prices in Toronto and Vancouver to hold for the rest of this year.

"But prospects for other key markets look much weaker, especially Calgary and Edmonton," he wrote in an email to HuffPost.

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