Is there a Problem with Canadian Housing Data?
We’ve all sat with dropping jaws while we’ve watched Canadian housing sales climb and climb over the past few months. And while we’re not getting the red-hot numbers that we were two years when the market was at its all-time high, we’re also not seeing anything near the collapse that many economists had predicted. Now some of those same economists have a reasoning for it. The numbers are simply being added up wrong.
That’s what Garth Turner says anyway. He says that there’s one reason why the numbers are coming up so high, and it’s because one house is getting counted twice, or as many as three times while the Canadian Real Estate Association are adding up the numbers. And the reason that’s happening is because when real estate agents want to sell a home, they’re allowed to list it on several different listing services to allow it to reach as many home buyers as possible. And he says, that’s the reason why this year’s home sales numbers are so much higher than last year’s.
“I must confess that it was a blog by Garth Turner that kind of raised that issue,” says Douglas Porter, chief economist with Bank of Montreal. “I found it kind of fascinating.”
He continued on to say, “You do have to look at the numbers through the lens of where they’re coming from, but just like any other economic data, I don’t think any single number should be treated as the final gospel. There is a margin for error around every economic statistic, and we take it with a grain of salt, but I think the CREA numbers do a good job of capturing the trend.”
But Gregory Klump, chief economist at the CREA – the organization responsible for the numbers in the first place – says that one thing does not necessarily mean another. He says that while homes may be listed two or three times, it does not mean that they are counted more than once.
“The fact is, Realtor.ca is not the basis on which we do our statistics,” he said, referring to the organization’s website. “Just because something is duplicately listed on Realtor.ca doesn’t mean that it’s duplicately counted in sales and in active listings.”
Porter also noted that unless this has been going on only just recently, and wasn’t happening last year – which isn’t likely considering that CREA hasn’t changed the way they collect their data – this isn’t an issue.
There are instead, other reasons for the difference in numbers. One is that halfway through last year the mortgage rules were changed and the market slowed to a near crawl. Now people are becoming more accustomed to those rules, many have saved up the down payment they’ve needed since July of last year, and they’re starting to come back into the market.
What do you think of this problem with Canadian housing sales data? Do you think CREA has it all wrong when they calculate those numbers? Or do you think Garth Turner is way off on this one?