This week realtors across the country will publish their latest stats. Most media outlets will slap on a byline and run them verbatim. And why not? This is the only source of sales and price data collected in Canada. Without what real estate boards tell us, there’d be no numbers. How would we know there was a bubble? Or a bust? To laugh, or weep?
So if the numbers are wrong, misleading or incomplete, there’s no benchmark against which to test them. And this makes it a very dangerous market. Together we have two-thirds of our net worth here, and collectively owe a trillion in mortgages to the bank. And yet all market knowledge and data we have is provided by people with a vested interest in fibbing.
In past months this blog has brought you lots of evidence of bad reporting. Double and triple listings for the same property. Year-over-year revisions of stats which are never made public. Inaccurate comparisons. Mixing of average and median numbers, plus the creation of the HPI Frankenumber to mask trending markets. The goal is to make people buy. To do that realtors remove fear and inject hope.
It’s about to happen again. More statements like this, from Toronto Real Estate Board boss Dianne Usher: “Sales were up strongly for all major home types compared to last year. Many households have accounted for the added costs brought on by stricter mortgage lending guidelines and have reactivated their search for a home.”
But how does that square with collapsing mortgage application numbers, like this?
Hmmm. This is troubling. It’s one reason a commenter here known as “RE Charts” has given up, after labouring over heat maps which suggested official real estate board numbers were, at best, flaky. “One of the reasons why I stopped developing my blog was the lack of future,” he says, “but nobody seems to care.” But he has taken some comfort in an initiative just launched – in a flawed by interesting way – by a collection of condo and new house-pumpers.
BuzzBuzzHomes operates web sites which slobber over builders in places like Toronto and Vancouver, and hate people like me. It was a Kodak moment months ago when swarms of readers of this blog ransacked a BuzzBuzz poll asking who the most trustworthy person was in local real estate, and elected moi. Oh, the agony.
In any case, the little Buzzies have taken up the torch of crappy stats, and are asking the demi-god we know as F to clamp down on raunchy numbers. An online petition has just been started which asks the feds to ensure these things:
1. That every property sale in Canada is recorded within 30 days of its occurrence and placed on a public online database that is searchable and machine-readable.
2. That the date of record for current preconstruction/under construction units is amended to the signing date, rather than upon completion and closing of the building.
3. That the fields related to the transaction included will be: the date, the price, the address (and unit number, if applicable), the primary use of the property, the property type and the parties’ addresses.
4. That the misrepresentation of any data entered into this record is a serious, punishable offence.
Well, that’s all cool and useful. But it does nothing to cuff realtors around the ears for their own transgressions. Still, it’s a start. Actually recording every sale in the nation in a prompt fashion would allow our 42-analyst GreaterFool Research Dept., for example, to compile stats against which real estate board hyperbole could be measured. And wouldn’t that be fun?
What does bother me about the Buzzy effort (likely influenced by the Vancouver operation), however, is the overt inference that it’s foreign money screwing up Canadian real estate. “Why is foreign investment potentially worrisome?” they ask. “Foreign investment is typically categorized as “hot money,” which means it flows in and out of the country quickly depending on market conditions. This “hot money” makes the overall market incredibly volatile.”
The Buzzards get even more xenophobic with this: “This lack of data puts Canadian homeowners at risk of losing a large portion of their savings, as foreign investment volatility could have a serious impact on home demand and, consequently, prices.”
Actually, if tidal waves of foreign cash have swamped the Canadian market they’ve probably raised net worth, not put savings at risk. But that’s why foreigners are so useful. People here can do stupid and emotional things, pig out on debt, get into bidding wars and embrace risk, then blame it on some guy from Guangdong. How convenient is that?
In any case, this is the one and only online petition asking the elfin deity to clean up critical data and provide transparency in an industry where ethics went to die. Maybe you should sign.