The Canada Mortgage and Housing Corporation (CMHC) has recently launched a new way of looking at our Canadian housing markets. I believe that this is a reasonable attempt to try to put some perspective on whether markets are ‘bullish’ or ‘bearish’. In their Quarterly Housing Market Assessment (HMA). To quote “(It)…considers four factors to assess the evidence of problematic housing market conditions: overheating; acceleration in the growth of house prices; overvaluation; and, overbuilding.” So far reasonably understandable and not too emotive, with the possible exception of ‘overheating’. That’s what grandma does when she’s cold but, do remember that from her perspective the ‘over’ doesn’t apply and it is just ‘heating’. They then categorise the 15 Census Metropolitan Areas (CMAs) as Strong, Moderate or Weak.
Now here is where a new set of definitions – some not articulated – can lead to conveniently exaggerated conclusions. A Vancouver Sun columnists’ article early in November drew the following conclusions – I quote –
“The Canada Mortgage and Housing Corp. has finally determined that Vancouver’s real estate prices are ‘overvalued.’ The housing corporation has consistently refused to peg the sky-high housing market on the west coast as excessively frothy or due for correction. It contends that underlying fundamentals justify and support Vancouver’s crazy housing prices and, earlier this week, CMHC officials asserted the region offers a range of affordability in its housing stock.”
That column continues… “For a lot of folks here, incredulous at bidding wars and lineups for pre-sales, that might seem an understatement. The activity around real estate in Vancouver, for many, reflects a state of madness involving deferral of all of life’s other temptations for the sake of owning some bricks and mortar.”
The use of ‘crazy’, and ‘mayhem and jostling’ ‘a state of madness’ and similar terms in this article, I do find difficult to deduce from the CMHC assessment headed “Vancouver: Weak evidence of problematic conditions”. The descriptor Weak, defines 8 of the 15 CMAs. There are 3 Moderate [Montreal, Ottawa and Quebec] and 4 Strong [Toronto, Winnipeg, Regina and Saskatoon]. Please visit the Vancouver Sun article at “Housing corporation acknowledges some excess in housing prices”.
I add this question to those posed in last month’s Update. Will our city continue to be the envy of the world, hence keeping pressure on prices in the most desirable locations?
As I write this we are approximately seven weeks away from Christmas and therefore close to eight weeks from the end of 2015. We have a new government and, yes, our data is giving us a good read on the annual outcome!