Evan Siddall says housing corporation could have been clearer with its gloomy outlook for house prices
There are many times that we rely on experts. Their analysis of the data and making sense of potential outcomes based on historic trends and headwinds can help us make the best investment decisions.
But they are not always right.
The pandemic’s story has been one of multiple plot twists and surprises and the number of times the word ‘unprecedented’ was used in the past year was, unprecedented.
One of the biggest economic stories in the time of COVID-19 was the performance of the Canadian housing market which, after an initial pause, surged to break several records.
With so much uncertainty and little historic data to draw on, the agency tasked with insuring much of Canada’s mortgaged homes took a cautious view and called for a potential slump in house prices of 9-18%.
In a series of tweets Monday, CMHC’s chief executive Eric Siddall addressed criticism that his team had predicted gloom while the outcome was boom.
“I've been taken to task for pessimistic housing forecasts last spring. At the time, I felt responsible to share what my colleagues were predicting. Times were uncertain and I felt that a warning about house prices was responsible,” Siddall posted on his Twitter account.
He added that he didn’t believe anyone accurately predicted what happened, especially the outsized impact that the virus had on low-income families who were more likely to be renters.
But he noted that at the time of the prediction of downside pressure on house prices, values were already inflated and mortgages were being deferred in huge numbers.
Siddall also highlighted that CMHC’s report included caveats and reservations that were less widely reported than the potential top-end house price correction.
In the post-thread, he said that “we never pretended to have a crystal ball” and wanted to provide an authoritative opinion “even though it was hard to be precise about future.” But he noted that the agency could have made that clearer.
It’s worth noting that CMHC was not the only authority warning about the housing market: Moody’s was among those urging caution, many months after the start of the pandemic.
Risks remain
However, he also pointed out that there are still risks to the housing market with “economic adjustments, increased debt, the diversion of economically valuable investment $ into housing, increasing inequality and increased GHG emissions post-pandemic with cities less populated,” all having the potential to disrupt the current upward trajectory.
That said, we never pretended to have an crystal ball. Nor are we all-knowing on housing. We meant to contribute to a discourse, even though it was hard to be precise about future. In hindsight, we could have made that clearer. 6/6
— Evan Siddall (@ewsiddall) March 1, 2021
