How much do we really know about the Canadian housing market? Not remotely enough. Given all the worry that surrounds it, the data is remarkably thin. Benjamin Tal, the deputy chief economist of the CIBC, performed a great public service on Thursday by making an impassioned plea for gathering better, deeper data on the housing market. He pointed out what everyone who studies the subject has long recognized: that the answer to most of the big questions is that we just don’t know. But we could.
What don’t we know? Mr. Tal’s short paper reels off a long list of essential, easily gathered and currently non-existent information. What’s the dollar value of mortgages originated in Canada in the last quarter? Don’t know. What’s the credit-score distribution of mortgages in Canada – in other words, how creditworthy are Canadian homeowners? Don’t know. What’s the average down payment? Unknown. What percentage of condos are owned by foreign investors? Answer unknown due to lack of data.
In this vacuum, analysts are largely forced to speculate. Opinions about whether the housing market is a bubble waiting to burst, or is well balanced and in no danger at all, are largely impressionistic or intuitive.
A whole range of Canadian institutions should be taking part in assembling more complete data, which would add up to a more reliable picture: Canada Mortgage and Housing Corp., the Office of the Superintendent of Financial Institutions, the Bank of Canada, the Department of Finance, the chartered banks, credit bureaus, the Canadian Bankers’ Association ... their name is legion.
Any one bank has an entirely legitimate interest in not publishing its proprietary data, but a confidential system could compile and publish the relevant housing data of all the banks as a whole. Governments, regulators and bankers all need this information.
As Mr. Tal says, with a new minister of finance, and newish heads of the Bank of Canada and CMHC, there’s an opportunity for a fresh initiative. The state of the housing market is one of the country’s most important economic issues, and one of the biggest question marks. It’s time to end the information shortage.