More data on the effects the housing market has on the economy is needed, according to one leading economist.
More data on the effects the housing market has on the economy is needed, according to one leading economist.
“The gap between the importance of the real-estate market to the economy and the lack of publicly available information on it is mind-boggling,” Benjamin Tal, deputy chief economist of CIBC World Markets states in the report. “Granted, having all that information is not a sufficient condition for preventing a collapse (see the US example), but it could be a necessary condition.”
According to Tal, there are a number of questions that current data does not sufficiently address, including the dollar value of new mortgages originated in Canada; the credit score distribution of mortgage credit; the share of non-conforming loans in the Canadian landscape and the delinquency rate of such loans; the net equity position of new and existing mortgages; the flow of rental activity in the Canada; the share of foreign investors in the condo market; and the average down payment, among others.
“The short answer to those and many other questions is that we simply don’t know,” Tal states.
Tal admits that banks and lenders have access to more information about the market but they cannot, for competitive reasons, disseminate the info; referring to the situation created by this as “unhealthy.”
"Banks and other lenders have access to much more information via their sizable portfolios than the average observer. They have a good sense of the down payment structure, the risk distribution of borrowers, their equity position, the delinquency structure and more data that is not in the public domain,” Tal states. “As a result, those with no access to such data, form their (usually bearish) opinion largely based on anecdotal evidence and/or questionable macro-based indicators such as the debt-to-income ratio and the price-to-rent ratio that hide more than what they reveal.”
However, Tal also suggests a number of institutions are able to rectify the situation.
He is calling for CMHC to provide “more timely and comprehensive housing information” and for OSFI and the Canadian Bankers’ Association to work more closely with Canada’s largest financial institutions to provide more info on credit and default forecasts.
“The gap between the importance of the real-estate market to the economy and the lack of publicly available information on it is mind-boggling,” Benjamin Tal, deputy chief economist of CIBC World Markets states in the report. “Granted, having all that information is not a sufficient condition for preventing a collapse (see the US example), but it could be a necessary condition.”
According to Tal, there are a number of questions that current data does not sufficiently address, including the dollar value of new mortgages originated in Canada; the credit score distribution of mortgage credit; the share of non-conforming loans in the Canadian landscape and the delinquency rate of such loans; the net equity position of new and existing mortgages; the flow of rental activity in the Canada; the share of foreign investors in the condo market; and the average down payment, among others.
“The short answer to those and many other questions is that we simply don’t know,” Tal states.
Tal admits that banks and lenders have access to more information about the market but they cannot, for competitive reasons, disseminate the info; referring to the situation created by this as “unhealthy.”
"Banks and other lenders have access to much more information via their sizable portfolios than the average observer. They have a good sense of the down payment structure, the risk distribution of borrowers, their equity position, the delinquency structure and more data that is not in the public domain,” Tal states. “As a result, those with no access to such data, form their (usually bearish) opinion largely based on anecdotal evidence and/or questionable macro-based indicators such as the debt-to-income ratio and the price-to-rent ratio that hide more than what they reveal.”
However, Tal also suggests a number of institutions are able to rectify the situation.
He is calling for CMHC to provide “more timely and comprehensive housing information” and for OSFI and the Canadian Bankers’ Association to work more closely with Canada’s largest financial institutions to provide more info on credit and default forecasts.
