CRASHONOMICS

A timeline of comments by various public figures on the Canadian housing market:

Avery Shenfeld Bill Morneau Bryan Tuckey Douglas Porter Hilliard MacBeth Jennifer Keesmaat John Tory Kathleen Wynne Marc Cohodes Stephen Harper Stephen Poloz Tim Hudak

Date	Expert	Quote
2017-09-11	Douglas Porter	BMO chief economist Doug Porter took issue with the central bank's lack of public remarks in the eight weeks before the rate increase. In a note to clients, Porter said he had no problem with the rate increase itself because the stronger economy had made a solid case for it. But he blamed the information vacuum for causing a "great deal of uncertainty" and a "fairly violent market reaction." Canadians hadn't heard a peep from the central bank since it raised the rate July 12 for the first time in nearly seven years, Porter wrote in Friday's note. Ahead of the July increase, senior officials including governor Stephen Poloz sent clear signals the bank had shifted to a rate-hiking path. However, for nearly two months before last week's announcement, the bank went dark. "There was no communication since the last meeting. Zilch. Zip. Nada. Nothing," wrote Porter, who had been predicting the bank would wait until October to raise the rate. "What we had here was a failure to communicate - an epic fail." Last week's hike also came as a surprise, Porter argued, pointing to one survey that found only six of 33 forecasters had anticipated the increase. In response to Porter's criticisms, the Bank of Canada released a detailed defence of its communications approach. Bank of Canada spokesman Jeremy Harrison said in a statement that market data before the hike showed the odds of a hike were about 50-50. Porter, meanwhile, said he believes there have been profound implications from the bank's progressive shift in tone. He suggested the steep climb in the value of the Canadian dollar since the spring has been related to the bank's tone swing from that of an institution on the verge of another rate cut as recently as early 2017 to that of "the most aggressive hiker in the world."
2017-09-06	Douglas Porter	Bank of Montreal chief economist Doug Porter said Wednesday's rate increase by the Bank of Canada will add further pressure on the weakening real estate market in Toronto, although much of the 0.25 per cent increase has already been anticipated and factored into long-term mortgage rates. "I think it would just further dampen the market and probably push out the recovery," he said Wednesday. Mr. Porter said a new increase coming so soon after July's rate increase "accentuates" the Bank of Canada's urgency to raise rates, which will leave many anticipating there could be yet another move later this year. "So I wouldn't brush it off -- I think that will put a bit more upward pressure on some of the medium and longer-term mortgage rates as well, and of course the variable rates will move almost instantaneously," he said.
2017-09-01	Douglas Porter	Residential construction, another economic pillar that naysayers have long said was due for a pullback, fell 4.7 per cent. "At some point, exports, capital spending and even infrastructure spending will have to step up to carry the load," Doug Porter, chief economist at BMO Capital Markets, told BNN. "We simply can't count on the consumer (and housing) to continue leading growth in the years ahead." While the rise in capital spending is "good news," Porter said he's "not sure we can call it a rotation yet, as consumer spending was also still very strong." "At least we can say growth now looks much better balanced, and it may be the first real signs that a rotation away from a reliance on consumers/housing alone has begun."
2017-08-31	Avery Shenfeld	"It depends on how quickly we get follow-up rate hikes, how much these other mortgage regulatory changes end up doing on their own," said Avery Shenfeld, chief economist at CIBC, asked about the national outlook. "At some point we do think that is going to cool prices in some of the most overheated parts of the country, but we might not see much action in terms of national house price measures, at least not until interest rates go up further." The average Canadian household owed a near-record US$1.67 for every dollar of disposable income in the first quarter, one of the highest ratios in the world.
2017-08-23	Douglas Porter	Six months ago, Bank of Montreal chief economist Doug Porter said what many were thinking and declared that Toronto has a housing bubble. Now, Porter has given that bubble its death certificate. "This is a late bubble. Bereft of life, it rests in peace," he wrote in a client note last week. To prove his point, Porter published a chart showing home sales in some regions in Toronto retracing all their gains of recent years.
2017-08-22	Bill Morneau	â€œPreliminary data received since the government implemented its most recent adjustments to mortgage rules in October, 2016, suggests that the rule changes are having their intended effect,â€ states Mr. Morneauâ€™s letter to the finance committee. â€œA decline in the share of new insured loans issued to highly-indebted borrowers suggests that the quality of credit is improving in the high-ratio mortgage market. This development helps to ensure that Canadians are taking on mortgages that they can afford.â€ â€œAdditional government support for home ownership, especially in the context of housing markets experiencing rapid price growth and restricted housing supply, are likely to be counterproductive,â€ Mr. Morneau wrote. â€œPolicies to further boost home ownership by stimulating demand would exert more pressure on house prices, with little or no positive impact on housing affordability.â€
2017-08-16	Douglas Porter	The chief economist of one of Canada's Big Six banks has made clear his opinion of those who downplay the impact foreign investors have had on home prices in the Greater Toronto Area. "Some would argue that non-resident investors were not a big deal in the market. (Some would also argue that the earth is flat.)," writes BMO Chief Economist Douglas Porter in a Monty Python-referencing note published today. On a seasonally adjusted basis, the overall value of home sales in York Region and Oakville-Milton nosedived 65 per cent and 53 per cent, respectively, in the four months following Ontario's late-April announcement of a foreign-homebuyer tax for the Greater Golden Horseshoe. "We would simply point out that these two regions were heavily influenced by non-resident buyers," Porter continues.
2017-08-07	Marc Cohodes	"Home Cap will be revealed as one of North America's great corporate fraud, lack of disclosure, un-shareholder friendly companies out there," and that Warren Buffett was in for a "loan-sharking deal." Mr. Cohodes doesn't think the pain is over for the alternative lender and that the recent Buffett deal will just delay Home Capital Group's inevitable downfall. Mr. Cohodes stated, "I think if they run this thing like a legitimate outfit, the company will not make any money ... their loan-loss provisions will go through the roof." Mr. Cohodes is clearly not a fan of the Oracle of Omaha, and he recently predicted that Buffett would get a "sweetheart deal to do other Canadian investments with a pat on the back from the Canadian government."
2017-07-25	Bryan Tuckey	But the supply of new-build homes is an ongoing problem, said Tuckey, who appealed to the government to help builders make more new homes, particularly low-rise housing, available. BILD statistics show there were only about 11,000 new homes on the market in June, compared to about 18,000 in the same month last year. Ten years ago, about half of the 30,300 new homes available were single-family dwellings. "The challenges builders face, including the lack of serviced and permit-ready developable land and out of date zoning bylaws continue to impact the supply of housing," said Tuckey in a press release.
2017-07-21	Bill Morneau	"There's no time at which you say we will stop being vigilant," he added. "We want to make sure that the market is healthy. We want to make sure people's big investment – their housing investment – is safe and secure as best we can." Morneau said the measures his government has implemented so far, including stress tests and raising the down payment requirements, have started to achieve their aim of cooling some of the country's hottest housing markets. "It's early to cry victory, but the measures are having the intended impact," he said. "It was probably not a coincidence that the Prime Minister and I were in Seattle meeting with Warren Buffett a few weeks before Buffett came in and decided to make an investment in Home Capital," he said, noting they didn't discuss the Home Capital specifically but spoke about the "emerging strength" of the housing market. He noted bodies like the Bank of Canada shouldn't be concerned with intervening. "We do believe that the federal government has an important role in understanding the market and remaining vigilant... the Bank of Canada's mandate is not about the housing market. It's very much about inflation."