Boom, bust and breathlessness

It was reported last week that Canada’s six-year housing boom – the biggest in more than 50 years – has officially ended. “Sales tumbled” in the first quarter of 2008 in markets across the country, with “listings surging” in the particularly hot Western Canadian market. “Aside from a few choice prairie locales,” wrote Douglas Porter, deputy chief economist at BMO Nesbitt Burns, in a barnburner of a research note accompanying the Canadian Real Estate Association report, “sales are melting faster than this year’s snowpack.”

Well, I guess it wouldn’t be real estate if it the report weren’t slathered in hyperbole. In many big cities across the country, real estate has usurped hockey as the most fanatically-followed spectator sport – with equally dramatic, third-period-with-60-seconds-remaning-in-the-game type of reportage. You could argue, in many ways, that by treating housing prices as a sport, the media feeds the boom-or-bust nature of B.C. real estate. If a young starving artist isn’t being squeezed out of downtown Vancouver by “skyrocketing” condo prices one minute, then a highly leveraged retired couple – who just spent $1 million on a home in the Kootenays – are having their nest egg threatened by a market “melting” away. There is no middle ground.

Whether in the throes of a hockey game’s last minutes or the last months of a housing cycle, we as journalists often forget to step back and take a look at the fundamentals. Where B.C. is considered, these facts remain: both immigration and interprovincial migration continue to expand at rates above the national average, as does economic growth; there is something called the Olympics coming to town (which does wonders for property values, if nothing else); and in Vancouver at least, there is nowhere else to build. That’s why prices will continue to rise. On the flip side, affordability is at an all-time low, and the economy is undeniably slowing. That’s why sales will slow.

We’re watching a 3-2 game, and it’s going to take four hours to play: kinda of boring, yes, but sometimes that’s the way the game is played. Too bad nobody wants to write that story.

Matt O’Grady is the editor of BCBusiness.