If I were to describe Calgary’s real estate market as “robust”, “exhibiting strength”, with “tight” conditions – would you get the sense I was alarmed or worried?
Today, the Bank of Canada released October’s Monetary Policy Report which touches on the housing market on page 22 & 23.
Apparently to the Globe & Mail, the adjectives used at the outset of this post indicate that the Bank of Canada has “suddenly raised red flags about the Toronto, Calgary and Vancouver housing markets.“
Aside from the click-bait title, here’s the portion in the Globe article I had an issue with:
“In its monetary policy report today, the central bank said housing markets in eastern Canada “appear to show signs consistent with a soft landing,” given slower price increases and sales volumes.
But here’s the crucial line: “This contrasts with major cities in Ontario, Alberta and British Columbia, where housing markets are generally robust and much tighter.”
Bank of Canada Governor Stephen Poloz and his colleagues did not say Toronto, Calgary and Vancouver were necessarily heading for a hard landing, but the distinction was noteworthy, nonetheless.”
Since when is the opposite of a soft landing a hard landing? The Bank of Canada was describing the regional differences and that some markets were still climbing. Ro·bust (rōˈbəst,ˈrōˌbəst/) adjective 1. strong and healthy; vigorous.
In the original Globe & Mail story that I took a screen capture of here, the article conveniently omitted the following statement from the Bank of Canada that explains: “a good part of the strength can be explained by favourable demographics and strong employment gains in parts of the country.” The Bank of Canada continues by adding that “nonetheless suggests that household imbalances could increase further.”
We’ve been hearing about household imbalances for years now, but the part that the housing market’s strength in areas (ie. Alberta with its strong employment gains) has fundamental support is what’s noteworthy. Furthermore, there wasn’t even one specific mention of Calgary, Vancouver or Toronto in the Bank of Canada report at all.
I tweeted my annoyance to the Globe author for skipping the perhaps most relevant detail from the report because it didn’t fit the narrative. I have to give him credit – he has now updated the article to include it and the following caveat: “The central bank did not cite specific cities. Nor did it say they were headed for trouble. But I took it as a warning sign.”
(Update: The article has been edited and parts rewritten once again.)
A little disconcerting that so much of that article was based on opinion/bias rather than just reporting on what the Bank of Canada actually wrote.
When reading news (or even my blog posts for that matter) I urge you to read the reports the articles are based on so you have the complete picture and not just a cherry-picked interpretation of it. What I find important and highlight in my posts might not be what you do. That’s why I always link to the full bank commentary or report for you to read through yourself and come to your own conclusions.
Alright, with that out of the way – onto the weekly update :) Sales in Calgary through three weeks are robust but are no longer on track for beating 2005’s record for October.
Helping ease the pressure of the 9.85% y/y increase in sales are new listings which have jumped 16.64%. Even with the hike in new listings and 733 additional homes for sale compared to this time last year, the overall market is at a 71% sales-to-new-listings ratio which indicates conditions still favor sellers.
Average and median prices are both up over 5% year-over-year with most of the gains attributed to the single family segment.