I know this is super late to the party, but my mind still boggles at the CMHC housing market “analysis” they like to publish quarterly. Last quarter they finally woke up to the fact that something may be wrong in Vancouver. Hilariously this may have come when the bubble was already well on it’s way to deflating.
We covered the previous quarterly report when it came out, but I might as well mock them again. As little attention as the Victoria report received in the media, it apparently received even less attention by the people writing it. The note at the bottom of the page says “Results are based on data as of the end of December 2015” which is exactly what it said 3 months ago. So either they haven’t updated their data or (more likely) they tossed the report together on a Friday afternoon and didn’t worry too much about proofreading.
The report for Victoria? Mostly green across the board, although the “Overheating” category (sales/new list ratio) has moved to moderate as it passed 80% for Q1 2016. The overall assessment is green though so it’s all peachy. In fact it seems we are most similar to the Atlantic coast among such cities as Halifax, Moncton, and St. Johns.
So what’s happening in Moncton that makes it so similar to Victoria? Well this is a market that is so fantastically boring they last bothered to update their statistics over a year ago. Back then the average house cost $155,000 and it hasn’t gone anywhere exciting since.
But wait. Isn’t the Atlantic coast a depressed economic region? I’m sure their incomes are a fraction of ours so the house prices make sense in the local context.
Nope. Turns out those bogtrotters make almost the same as us!
The thing is, I may have accepted the argument that we must compare to historical norms. That price to income has been high historically in Victoria so we have to see the current levels in that context. But that’s not what the CMHC is saying. They say that the overvaluation metric is defined by fundamentals such as incomes, the cost of financing, and population. Well incomes are about the same, the cost of financing is identical, and Moncton’s population is growing at over twice the rate of ours. And yet the CMHC is squinting their eyes at that graph and saying “Those are about the same, eh?”