The headline on the Global Edmonton news story read, “Canadian housing sales up in September.” The rest of the piece, supplied by Canadian Press, said:
“OTTAWA – Despite a slight recovery from August, home sales in September fell 15.1 per cent from a year ago due to tighter mortgage lending rules and an uncertain economy, the Canadian Real Estate Association said Monday.”
Huh? So, were sales up? Or were they down? Well, both, actually.
“The association said sales in September were up 2.5 per cent from August – the first month-to-month gain since March.”
If you’re confused by sales being down 15.1%, which of course means there was a 2.5% increase in August, then the nation’s realtors have done their job. They sure managed to diddle with Global’s headline-writer, who likely bought a condo in Edmonton with 5% down which she borrowed from mom.
As this pathetic and likely catatonic blog has recently documented, real estate deals almost everywhere are in trouble. Toronto sales plopped 20.5% last month and are weaker by 10.5% so far this month. GTA condo sales crashed 20% in the third quarter. Vancouver sales dumped by a third in September. Victoria down 8%, Edmonton off 12%, Hamilton lower 19.7%, all of Nova Scotia weaker by 13%. I could go on, but you get it.
By the realtors’ own admission (and real estate board stats), more than half of all the markets in Canada saw sales drop by at least 10% in September. That has not happened since the financial crash of 2008-9. But on the planet where CREA lives, that was good news. All you need to do is add a little secret sauce, called ‘seasonally adjusted.’
So, a 15.1% year-over-year sales drop across Canada, seasonally adjusted, becomes a 2.5% jump. A month-over-month crash of 8.1% in poor Vancouver turns into a healthy increase of 4.2%. An erosion in most major markets from August to September morphs into an advance in 60% of the nation (including Toronto, where sales fell 21%). In fact, the worst country-wide decline in four years becomes “the first month-to-month gain since March.”
Combine all this with the Frankenumber MLS Home Price Index (which shot higher by 4%), and you can see why moist young virgins, television broadcasters and even a few cocker spaniels think real estate’s still hot.
Meanwhile, here’s an interesting passage from the Toronto Star this week, more closely depicting reality and giving us another example of a rare realtor with integrity – or at least balls.
“Veteran Mississauga realtor Mike Donia has been through two housing downturns and he’s been seeing the same telltale signs across the GTA since May. Inquiries to his office from buyers are down at least 65 per cent, bidding wars are going bust and he’s seeing a growing number of power of sale properties — including a $13.9 million Bridle Path mansion — popping up on the MLS.
At the same time, he’s got over a dozen clients trying to get out of pre-construction condo deals penned more than a year ago because they now find themselves overextended and fearful the condo boom is about to go bust.
“My geiger counter has been going off for four or five months now,” says the 25-year veteran of the GTA real estate business. “I can’t tell you when the epicentre of the earthquake is going to hit, but the picture on my wall is shaking.”
New house sales in the six-million-person GTA have dropped by 65%, while the resale market saw a 20% reduction in the last three months. There are enough houses for sale in the once-hot Vancouver satellite city of Richmond to last into 2015. Canadian household debt has just achieved new record levels. In fact, it’s about where the US housing market exploded in 2005-6.
Sorry. Correction. The American market didn’t blow up. First deals tanked. For example, new home sales in the US fell 39.5% between 2005 and 2007. But prices rose 13% during that same period of time (a phenomenon I have written about here often, which realtors now try to use as proof the market is stable). Investors who bought into that ‘rising, healthy market’ were soon slaughtered. New home prices crashed 24%, and failed to touch bottom until four years later. Resales collapsed by 32% – a decline the National Association of Realtors failed to warn consumers about.
As US prices began their final cascade, NAR’s chief economist, David Lereah, said: “The steady improvement in sales will support price appreciation…despite all the wild projections by academics, Wall Street analysts, and others in the media.”
It should be self-evident what is happening around you, and what threatens to happen.
But for once it would inspire to see a professional, expert body serve the people, not itself. Sadly, it’s not different here.