Real estate boards ignoring month-to-month losses to promote year-over-year gains
Written by Kit Kadlec – Canadian Real Estate
Home prices and sales across the country dropped in most major markets in July compared to a month earlier, but that’s not what local real estate boards are reporting in their press releases.
Comment: Except everyone who knows anything about real estate knows that prices peak in the late spring, usually around May, and then go down a touch in the following months. Happened last year. Happened the year before. Happened in 2002. It is not news, we all know it happens. If you follow the stats as closely as I do, you would already know this.
Rather than compare July figures to the previous month, real estate boards are instead touting the gains in sales and prices compared to 12 months ago. But this time last year, the market experienced a significant downturn.
Comment: And the market experience a downturn in 2008. And in 1990. So what? The market goes up and down all the time. July is the month that real estate agents used to take off – before things got way out of hand and the market was crazy every month – because it was so slow. Now people are jumping on the fact that the summer is quieter than the spring as a sign of impending real estate doom. The reason things peak around May is that people want to close on their new house before the new school year. This creates extra pressure around that time. Then things settle down through the summer as people go on vacation or just hang out in the backyard. In the fall, things will start to ramp up again. This is pretty much the same pattern as every year…
The Ottawa Real Estate Board ran this headline on its latest press release, for example: “Ottawa housing market warms up in July.” In fact, sales were down 22.5% in July compared to June, and average prices were down 3.6%.
The board instead promoted the fact sales were up 18.8% compared to a year earlier, and prices were up 6.2% over that period. Similar trends were also found in Vancouver, Calgary and Toronto, as local boards there also promoted the yearly gains rather than monthly drops.
One reason is that yearly trends are considered more accurate by some, as sales can largely be influenced by the weather and time of year, for example. Thus, comparing July with a previous July can be more useful than comparing it with June.
Comment: Exactly. Things change month to month, different seasons, different world events. You cannot compare on such small time frames and get meaningful data. Compare the same month, year over year over year and you get a pattern of what is happening on a macro scale. And these are all average numbers. One big sale on the Bridle Path and the numbers get skewed.
Others see it as spin by the boards to promote a constant positive picture in each of the press releases, which often get repeated in news media with the same angle that’s fed to them.
Comment: Only the tinfoil hat crowd and the media. And the man quoted below.
In his blog, Garth Turner labeled the practice of using yearly stats by the Toronto Real Estate Board as “deception” and “illusion.”
“Big drop in sales and prices from last month. Valuations trending lower since the spring. Total 2011 sales lower than those recorded last year. So are words like ‘strong home sales,’ ‘second best on record’ and substantial rebound’ responsible? Of course not,” noted Turner on Toronto’s market. “These are realtor-salesguys.”
Comment: Wow… stating the simple fact that last month was the 2nd best July ever is spin? It is a fact! Almost-record months do indicate strong sales, do they not? As noted above, last year saw a downturn, so numbers being up this year is not a substantial rebound? Come on… let’s talk spin. How about the uber-negative guy who tries to make everything point to the real estate world imploding and destroying all associated wealth and people within. Sorry, trying to make everything suit a pre-conceived negative viewpoint is spin. Or deception. Or just simple delusion.
Turner was referring to the August press release, which quoted Toronto Real Estate Board President Richard Silver. “If the current pace of sales hold up, we could see the second best year on record under the current TREB market area,” Silver said in the release (read it for yourself here – http://www.torontorealestateboard.com/consumer_info/market_news/news2011/pdf/nr_market_watch_0711.pdf).
Comment: So if 2011 is a little less than the previous best year, that is a FACT. The truth. Actual evidence. There is no spin, no doctoring, no deception. You cannot argue with the numbers and TREB simply reports them. Read all of the press releases for yourselves, dear readers. They are boring and dry, simple recitations of the facts. It is the fear mongers and opinionators who put their spin on the numbers, ususally trying to make them seem worse than they truly are.
Sales in Toronto were up 23% in July 2011 compared to July 2010, but were down 22% from June 2011.
Comment: Sales are down because listings are down. Duh. And it must be noted that the 22% fewer sales number was CONTAINED IN THE TREB PRESS RELEASE! So who is trying to deceive who? Some people in the media could turn a cat being rescued from a tree into a tale of woe and destruction.
Some boards, such as the Edmonton Real Estate Board, just left the bad news out of the release. While promoting that sales were up 3.6% in July compared to 12 months earlier, there was no mention by the board that sales were also down 9.3% compared to the previous month.
Take a look below at how the picture of these markets greatly changes depending if you’re comparing monthly or yearly stats.
July 2011 sales compared to June 2011: –22%
July 2011 sales compared to July 2010: +23%
July 2011 average prices compared to June 2011: –3.2%
July 2011 average prices compared to July 2010: +9.7%
Comment: But, stats can always be manipulated. For fun, lets compare May 2011 to May 2010 and April 2011.
May 2011 sales compared to April 2011: +11%
May 2011 sales compared to May 2010: +6%
May 2011 average prices compared to April 2011: +2%
May 2011 average prices compared to May 2010: +9%
In this instance we see that both monthly and yearly comparisons show increases. We could do this for every month of the year and we would see month-to-month comparisons increase and some decrease. But I bet most or all of the yearly comparions show an increase. The point is to show long term trends, not the little blips that occur because of weather and vacation time.
Spin is truly the art of choosing stats to support a preconceived notion. Simple reporting of facts is just that. I will trust that my readers are smart enough to spot the difference.
Contact the Jeffrey Team for more information – 416−388−1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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