No Condo Bubble Here

Canadian Housing Bubble: Data Is Not Art

Ever look at 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…  To continue reading, please click here.

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