Something really bothered me about the MACLEANS article I referenced in the previous blog post. No, it wasn’t Robert Shiller saying real estate agents and their economists are biased with their forecasts…we know that to be true – for some. It was the following two paragraphs:
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Even when you look at the quality of the underlying data itself, the Teranet numbers come out ahead of what the economists are working with. The National Bank’s Côté says he originally didn’t want to produce a housing index at all. If there had been a reliable source for Canadian housing data already, he says he would have likely just used that. But it turned out that the only comprehensive data for resale home prices in Canada came from CREA, the national organization supporting the real estate industry.
Unfortunately, the CREA numbers had problems. “There was a lot of cleaning on their data to be done,” he says. “Their data is actually physically inputted by real estate agents as they sell the houses. And obviously, as a real estate agent, it’s in your best interest to show that prices are not falling too much because that’s how you make your living.”
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When you read that, what impression do you get? That agents falsely input numbers to suit them, right? That real estate board statistics aren’t reliable? Read through the public comments after the MACLEANS article and you’ll see dozens of posts slamming “those price-inflating, lying realtors” because of those very two paragraphs. I wonder how many of them contacted the source of the quote to get the context instead of believing it verbatim with all its intended(?) implications.
Well, I did. I contacted Simon Côté with the National Bank (it was his quote in the article) and he explained it to me:
“I am not to sure what Duncan Hood is referring to. If I recall correctly his question was: «Why didn’t you go to CREA for your index data?» My answer was that I did not believe I could convince every REB to jump in and participate.
I do not think that he is referring to the reliability of the data.
We had a quick discussion about the format of the data that differs from region to region and through different period. The challenge would have been to standardize everything.
I have no reason to question the accuracy of the data.”
Now that changes everything, doesn’t it? The journalist took liberties with Simon’s explanation to create a stir. It’s that kind of reporting that does consumers no good.
The Edmonton Sun had a similar article a while ago where the journalist stated:
“It’s getting so bad the Edmonton and Calgary real estate boards now appear to be fudging the stats” (Source)
Of course I contacted him because that was a serious allegation. His response was:
Instead of calculating the drop from the top of the market, both boards are using year to year comparisons. So instead of a 17.5% reduction in the SFD price, Calgary calls it 6% and Edmonton says it 7.9%. In my opinion that’s called a “fudge.””
Ouch. Talk about a loosely ascribed definition of the word.
Just goes to show that you have to read between the lines of everything you read – not just from what comes out from the real estate industry.
