Why the CMHC doesn’t understand its own market

Why the CMHC doesn’t understand its own market

Housing affordability remains a sensitive issue in Canada’s largest markets. In cities such as Vancouver and Toronto, demand for housing far outpaces supply. This leads lenders to act more reluctantly in providing new home buyers with adequate mortgages.


CMHC remains complicit in this struggle between buyer and lender. The organization insists on providing conflicting positions on its own governance and on the current state of Canada’s home buyers.  Quite simply, the modern-day CMHC is a shell of its former humble late 1940s beginnings.


The CMHC no longer understands the market it intends to help.


On November 29, the CMHC released its 2016 Q3 (third-quarter) report. In it, the organization argued a small, yet pressing point that CMHC-insured home buyers had a strong ability to manage their debts. The underlying message in this conclusion stands to assuage the public that the CMHC continues to be a public benefit. The irony is that in the extended report, a graph shows average credit scores of CMHC-insured home buyers decreased. This decrease happened even though total debt service ratios barely shifted negatively.


A drop in credit scores occurs when consumers can’t pay revolving debts (like credit cards and lines of credit) on time. A loss in credit score points usually means people miss making payments or carry a balance.  A +/- 5-point difference in customer credit scores shows that CMHC-insured buyers possibly cut corners on bills. This means that people re-shift money to make mortgage and premium payments.  Paying these CMHC premiums along with bills becomes a stressful liability to buyers instead of an asset. Unfortunately, the CMHC won’t acknowledge the reality that outside of mortgages, most of its consumers possibly struggle with revolving debt.



Because indebtedness due to high housing payments is not CMHC’s concern. In the interests of the Canadian public, it should be.


Citizens and industry experts addressed housing affordability and needs in a November 22nd Let’s Talk Housing report. Produced by CMHC and the Government of Canada, the report outlines proposals for future housing strategies. The justified and candid consumer perspectives in the report show that Canada’s housing markets need reform.  All the while, CMHC absolves its role in overseeing the recommendations through a disclaimer in the report.


Why would CMHC disavow positions in a report it produced for the public?


Could it be that CMHC doesn’t care about providing affordable housing and is publishing reports to save face?   


We definitely think so.


November 30th marks the day that CMHC wielded a double-edged sword against the public.  Eager to get on the housing ladder, first-time buyers express constant frustration and concerns about foreign buyer influence. This concern is especially present in heated markets, such as Toronto and Vancouver.


In a media package provided by the CMHC, Bob Dugan, the corporation’s chief economist  stated boldly that foreign ownership remains a low figure nationally. The dishonesty of the news report is that CMHC intentionally focuses its secondary analysis on Montreal’s housing market.  Montreal’s market holds the least amount of foreign buyer investment. This is perhaps due to language barriers and house buying rules that differ from the rest of the country.


Using Montreal as the prime example for low foreign investment is not only deceptive, but fails to address the concerns of Canada’s two most primary heated markets. Housing prices and demand in Toronto and Vancouver easily exceed those of Montreal. CMHC’s position falls short if Toronto were the featured market.


In order to not lose consumer trust, the CMHC needs to proactively get back to its roots, be honest about its disconnect from the public and find productive ways to serve the people who keep it functioning.


Failing to do this will only further displace and disenfranchise future home buyers. And that’s not the kind of future a Crown corporation should look towards.



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A Maryland native and Toronto-area transplant/graduate of the University of Toronto, Christine is a content writer at Loanerr. When not writing articles, she's an avid swimmer, cat lover, violinist in a indie band, and a humble food aficionada.