Back in early April, Benjamin Tal, the deputy chief economist of the CIBC, lamented the yawning gaps in the data about the Canadian housing market. He argued that the various entities that gather such information should collate their knowledge. Then we might actually find out whether there is really a housing bubble or that it is only a widespread bogey.
It is refreshing and encouraging that the recently arrived CEO of Canada Mortgage and Housing Corp., Evan Siddall, agrees with Mr. Tal; it shows open-mindedness in the head of a large government bureaucracy.
In spite of the information gap, Mr. Siddall and his colleagues express considerable confidence that the housing market is “modestly overvalued,” that it is “almost never at equilibrium,” and they “believe there will be a soft landing.”
More particularly, CMHC recognizes that it has little knowledge about how many new condominium units are owned by foreign investors. The chartered banks, which deal directly with condominium purchasers, are in a better position to know the foreign/domestic ratio, an important question because it is not hard to imagine a sudden loss of confidence in Canadian condo units among foreign investors. CMHC does, however, have access to condo resale numbers, and there is little sign of frequent “flipping” of units – which is a good thing. Still, it is not easy to conduct surveys of the unit owners, let alone their hopes and intentions.
So far, the appointment of Mr. Siddall appears to have been a good choice to lead CMHC, bringing a fresh view from the private sector – he is a former investment banker who worked at Goldman Sachs with Mark Carney, the former governor of the Bank of Canada and current Governor of the Bank of England. He acquired a taste for public policy in working with Mr. Carney on the “too-big-to-fail” conundrum in international financial regulation.
That seems quite consistent with his intention to make CMHC a more focused entity, not one that’s too large – rather, one with a core public purpose, hence, not a candidate for privatization.