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 2^nd 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​.toron​to​re​alestate​board​.com/​c​o​n​s​u​m​e​r​_​i​n​f​o​/​m​a​r​k​e​t​_​n​e​w​s​/​n​e​w​s​2​0​1​1​/​p​d​f​/​n​r​_​m​a​r​k​e​t​_​w​a​t​c​h​_​0​7​1​1​.​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.

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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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