To The Pointwith Boris Bozic
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1 Comments Canadian Housing Bubble: Data is Not Art

Article written by Boris Bozic on the 24 Jul 2012 in Canada,Current Events

“No Condo Bubble Here.

Really?  Everything I’ve been reading indicates that the condo market in Toronto and Vancouver was going to play a key role in the Canadian housing bust.”



Ever look a painting and say to yourself “it looks like something my six year old painted in art class”.  That’s the thing about art – it’s all in the eye of the beholder.  One person’s interpretation can be radically different than someone else’s.  That’s perfectly acceptable when it comes to art.  Art is about taste.  We all know that data can be manipulated to make a point but it’s fascinating how simple raw data can paint completely different pictures.  And is there any room for taste when analyzing data?  I was stuck by a story in the Financial Post this morning, the headline read; ”Toronto not in condo bubble: RBC”

Really?  Everything I’ve been reading indicates that the condo market in Toronto and Vancouver was going to play a key role in the Canadian housing bust.  Surely this article is based off the same data that Robert Hogue, RBC’s senior economist, used for his most recent report.  According to Mr. Hogue, “Toronto’s condo building frenzy over the last few years is mainly a response to the steep drop in new single-family homes being built. Efforts by the Ontario government to stem urban sprawl in the GTA is one of the reasons why developers are being forced to build laterally, said Mr. Hogue. To accommodate the 38,000 or so net new households it sees every year, the GTA must increasingly expand its housing stock ‘vertically’”.

Hang on a second, Mr. Hogue is the only economist to factor in that 38,000 new households are required to meet Toronto’s needs, and that the Ontario government is making it difficult for builders of single family homes outside of the GTA?  Kudos to Mr. Hogue and RBC for discovering that super-secret bit of information.  Let’s see what other nuggets Mr. Hogue came up with, like investors buying up condo’s with the sole purpose of flipping the property. “Their involvement has not inflated overall housing demand beyond household formation and may contribute only to a modest overshoot in the coming years if demographics weaken”.  Well, what are we supposed to think now?  I say that with tongue firmly planted in cheek.

For transparency purposes, Mr. Hogue did sound an alarm bell, “if investors overwhelmingly buy single-bedroom units, for instance, it could skew demand and result in a bubble.”  Let’s also not forget that if aliens land and suck the brains out of every builder and then program them to build one bedroom units only, that too could contribute to a bubble.  I think we have it all covered now.  The fact is that facts are interpreted differently.  One analysts’ “slight overshoot” is another’s “Armageddon”.  For debating purposes that’s okay, for making public policy, not so much.

To read the full story in the National Post, please click here. 

Until next time,



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    "I work in a world of numbers, process, execution, risk mitigation and all kinds of other sexy stuff. To share my thoughts, opinions and personal tidbits does have some creative appeal for me. It will also push me to do something that I am not totally comfortable with, writing. Get me in front of a room full of people to do a presentation and I'm on. Writing a story that others may actually be interested in reading sounds like a challenge to me. The reality is that I enjoy a good challenge and if it ends up that mom is the only reader of my blog so be it."

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