That's fine but it's not what I was referring to.A sale is reported as a sale. The number of private sales are very low in numbers and probably woulld not change any of the reported figures.
You may disagree with these numbers but they are correct.
MLS Phantom Listings Distorting House Prices: Consultant
A real estate consultant’s warning that housing market data in Canada is being artificially inflated has some economists and market observers wondering whether the recent upswing in house sales and prices might be partly an illusion.
Real estate consultant Ross Kay alleges that realtors in certain parts of the country — particularly in Greater Toronto and southern Ontario — are artificially inflating home sales by listing the same property twice, or sometimes even three times.
Kay says when a double- or triple-listed house like this sells, the additional listings are counted as a sale by every one of the real estate boards to which the house is assigned. That turns one sold house into two or three sales in the housing data.
The end result, Kay argues, is that reported home sales and house price numbers are higher than they really are.
“Statistically valid month-over-month comparisons on sales volumes are inflated as much as 15 per cent in some cities in 2013,” he told HuffPost in an email. “Average prices are skewed upward as much as 10 per cent some months.”
This screencap of homes for sale in Oakville, Ont., as of last Friday, shows a significant proportion of houses have “phantom listings.”
Ross Godsoe, CEO of the Realtors Association of Hamilton-Burlington, said Kay is “probably correct” in his claim that houses are being double- and triple-counted.
He told HuffPost Canada that any house listed in his area — even if it is listed elsewhere — would count towards the monthly sales numbers.
Godsoe could not say whether other real estate boards operated the same way. Calls to several other real estate boards in southern Ontario were not returned as of press time.
Under Ontario’s realty rules, realtors can’t be prohibited from listing houses in areas other than their own, Godsoe said.
“If a sale occurs, we’re obligated to report that,” he said, adding he did not know what the Canadian Real Estate Association (CREA) does with the numbers once it receives them.
CREA’s monthly numbers are arguably the most closely watched indicator of housing market health.
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CREA spokesman Pierre Leduc told HuffPost the association checks the data coming from local boards to ensure houses aren't double-counted. That contradicts what Kay and others have said — that CREA only gets aggregate numbers from the boards, and has no way of telling whether houses are being double-counted.
“CREA takes the amalgamated data … from over 70 regional MLSs and adds it up and reports on it — no addresses are ever provided — without the ability to audit the data,” Kay told HuffPost in an email.
UPDATE: In a follow-up conversation, Leduc clarified that most real estate boards send the association only aggregate data, meaning CREA would not know if houses are double-counted. But for the handful of cities used in its house price index, CREA checks the data to eliminate double-counted houses, Leduc said.
CREA chief economist Gregory Klump could not say if CREA's data included double-counted houses. But he estimated the phantom listings account for no more than 0.8 per cent of the housing supply available.
Godsoe of the Hamilton-Burlington board similarly said any effect phantom listings would have would be “very minor.” He said he is "absolutely" confident in the reliability of his real estate board's numbers.
At the local level, the impact can still be significant. If a significant proportion of houses have double listings in places like Oakville, that could cause meaningful changes in house sales numbers for Hamilton, the Peel region and Greater Toronto.
And because the Toronto area is weighted so heavily in house price indices, it could be distorting national data as well.
In his own audit of CREA’s data, Kay said there were 2,902 more home listed as sold than there really were in August of this year. While CREA reported 40,315 homes sold in Canada in August, Kay’s audit found sales were only 37,413 — a difference of 7.2 per cent.
While CREA’s numbers report home sales in total are down 2.9 per cent for the year to date, compared to the same period last year, Kay’s audit found a decline in sales of 9.6 per cent this year so far.
Housing "remains fully in a full market correction phase," Kay concluded on his website.
Kay’s claims have some economists wondering about CREA’s numbers.
BMO economist Benjamin Reitzes noted the controversy in a client note Monday morning, and told HuffPost Canada he found that the sales numbers from the local Toronto-area boards compared to stats from CREA “were off just a little bit."
But Reitzes and other market observers said the practice was unlikely to raise house price numbers, because it increases the apparent supply of available houses as much as it increases the sales numbers.
Kay disagrees. He says the double- and triple-listings are concentrated more at the top of end the housing market, and those increased “sales” at the top end are pulling up the average house price.
Kay says the entire practice is possible because “the MLS infrastructure legally requires silence and non-disclosure of any fact that could negatively impact any active listing on the MLS or any of its members.” He says this has become a massive problem in reporting MLS data since 2010.
BMO’s Reitzes, like some other market observers, highlights another potential area of unreliability. He says he was told by CREA that the association doesn’t adopt revisions made to earlier numbers from local real estate boards — something he calls “a bit of a red flag” on the data.
Canada’s housing market has been showing surprising strength in recent months, after a slowdown last year following the introduction of tougher mortgage rules.
CREA’s own numbers, released Monday, show home sales rising 11.1 per cent nationally in August from the same month a year earlier.
The Toronto Real Estate Board reported a 21-per-cent jump in house prices from a year earlier for August, while Vancouver saw sales soar a stunning 52.5-per-cent jump in the same period, according to its local real estate board. There are few “phantom listings” in evidence in the Vancouver market.
Kay’s website features a warning not to trust home sales numbers for both Toronto and Vancouver.
“If you need statistics in any of these areas DO NOT rely on the real estate associations serving those communities. You must get audited data for these areas,” the website states.
UPDATE: Caroline Feeley, a sales rep with Sutton Group Quantum Realty in Mississauga, writes in to say she agrees the double and triple listings are distorting the statistics.
"I am not at all pleased with loading a listing three times and I feel that it is ridiculous to have to do so," Feeley writes. But she explains she has no choice, because of the way the "fractured" real estate board system works. In her own words:
What you don't know and what the public doesn't know is that the listing needs to appear separately on the Toronto Real Estate Board, the Oakville, Milton and District Real Estate Board and the Realtor's Association of Hamilton and Burlington for Realtors to be able to search the full listing from their home board. What this means is that if I were to only list the property on RAHB, realtors from the other boards would not be able to search and find the full listing! Since most properties are purchased with a buyer working with a realtor, I will do everything I can to ensure that realtors across the real estate boards have access to all my listing.
My listing in Waterdown should, at the very least, be listed on RAHB because this is where the property is located, and local realtors need to have full access to the listing. But why should Oakville and Mississauga agents not also be able to see this listing on their board? To me, it's ridiculous that they don't automatically have this access. A lot of real estate transactions are from people moving east to west. If my listing on Victoria Street was not also listed on OMDREB and TREB, I would potentially be excluding all the prospective buyers working with realtors on those boards.
As long as we have multiple real estate boards in the province that operate this way, a good realtor will list on multiple boards. I hope that one day soon, there will be an amalgamation of boards or some way that we can ensure all realtors have full access to listings, but until that day, in my practice anyway, the numbers will be distorted as I continue to serve the best interest of my client.
At last look the article specifically warned of the same practice in Vancouver. I noticed that you qualified your statement with the words "to the best of my knowledge". Isn't it true that the BCREA, like the CREA, also draws its sales data from multiple local boards and if "a sale" can show up in the stats as multiple sales - that's a problem?Thanks for the info. We are under the BCREA and at last look we are not Toronto. To the Best of my knowlege a Sale is a Sale.
That problem does not seem to apply in this case. Because BC has more than one local board (Vancouver, Fraser Valley, etc., etc.), it appears likely that the BREA numbers are subject to the same multiple reporting of single sales, hence the observations are very relevant to our Province.This is a problem with a lot of info out there on this site... people hear some information or use info that is not revelant to our Province.
Although I remain a long-term bull I think it is only fair to acknowledge that the many verifiable facts supporting the bearish opinions can be quite compelling, and logically they become even more so as we drift further and further away from historically normal price/rent/income relationships, particularly when the drift has been propelled by "emergency" low interest rates. The big question about the coming correction is the timing, it could be soon or perhaps there's still some life in the bull market yet, I don't know when it will happen but I'm deeply suspicious of those who imply it never will.There has been a huge number of posts over the last few years ago stating the Housing market is going to drop off the table. No facts just an opinion not supported with facts.
I think that's true and that's why so many people resent the lack of reliable numbers. The unaudited "Frankenumbers" from the real estate industry are less than helpful and appear to be crafted to produce a positive spin. About the only reliable numbers we can all see clearly are "emergency" low interest rates and the ever increasing disconnect between prices, rents and incomes. Even this tired old bull is getting uneasy.Numbers will tell you the real stories about the market.
With all due respect, the following quote suggests you are obliged to do so.I still standby my previous post.
Please understand that I enjoy your input to this forum because I like to see both sides of the argument. My intent is not to discredit you but merely to bring some balance to what I see being presented, I have a long history of questioning the comments and assumptions of some bears too. The article I posted appears to be relevant to the sales numbers which are being reported locally and any verifiable facts which you can present with regard to the local reporting methods is most welcome. The issue of multiple reporting of single sales is of particular interest.“the MLS infrastructure legally requires silence and non-disclosure of any fact that could negatively impact any active listing on the MLS or any of its members.” He says this has become a massive problem in reporting MLS data since 2010.
That's funny!I'm sorry but you are too intense for me to comment any further.
I reminded Barrie that the article specifically mentioned BC as a source of questionable real estate statistics and that our multi board reporting system appears to allow multiple reports of single sales, thus artificially inflating the number of sales and creating a situation where, despite his "best knowledge", a sale is a sale but it might be reported as several sales.Thanks for the info. We are under the BCREA and at last look we are not Toronto. To the Best of my knowlege a Sale is a Sale.
This is a problem with a lot of info out there on this site... people hear some information or use info that is not revelant to our Province.
The website of Ross Kay is referenced above, this segment is particularly pertinent to the current discussion and is good reading:http://www.huffingtonpost.ca/win-wachsm ... 61432.html
What's Happening to Housing Statistics in Canada?
Over the past few weeks the various media have inundated us with housing projections, prophecies and prognostications.
The housing market is going up -- or going down! (compared to what?)
What do those headlines even mean? Are housing starts up? Are housing prices up? Are the number of homes sold up? Or are more and more people building and living in concrete high rises?
And to what does "housing" refer?
The three broad housing categories are condominiums (condos), town houses and single family homes (SFH). (We have purposefully excluded those living in double-wides or in tents)
Lumping all three categories together and arriving at a kind of super number to reflect the housing market is disingenuous at best and darn right deceptive at worst.
When we examine the various housing numbers, it is also impossible to do an accurate analysis of any kind if we use the commonly misused word "average".
Does "average" refer to median (half the numbers are higher and half are lower? (3,4,5,6,7; i.e. 2 numbers are lower and 2 are higher.)
Or does "average" refer to arithmetic mean - where the sum of the values is divided by the number of values.? (In other words the average of 2,2,1,4 & 16 is 5; i.e. 25/5)
In recent months the Canadian Real Estate Association (CREA) and its various provincial boards have come under increasing criticism for manipulating sales and price figures.
Their favorite word? Average. They even have a page called the National Average Price Map (National Average Price Map)
Former Federal Conservative Revenue Minister Garth Turner, reveals some examples of their shenanigans on his website The Greater Fool (Manipulation) and (Truth and Trust)
For those ideological purists who will never accept TRUTH from a former Tory, no matter what, they are encouraged to examine the details presented by former realtor Ross Kay at (rosskay.com)
While studying mathematics and science in University, I was introduced to a marvelous book called How to Lie With Statistics by Darrell Huff (available from Amazon here How to Lie With Statistics).
J. M. Steele from Statistical Science, 20 (3), 2005, 205-209. is quoted as saying,
"Over the last fifty years, How to Lie with Statistics has sold more copies than any other statistical text.
Huff details how to spot data (statistical) manipulation and how to read data analysis properly so that you will not be misled.
It seems that the folks in the Real Estate Associations and Boards have been buying this book by the case lot as their data manipulation has been elevated to a new art form.
Not only are their numbers suspect, but the language used on their website and in their press releases also easily exceeds the Statistical Hyperbolic Indicative Terminology index.
Here's an example:
"While the Finance Minister will no doubt continue to keep a close eye on Canadian housing markets for signs of overheating as interest rates remain low, October sales results may provide him with reassurance that tightened mortgage regulations and lending guidelines are working as intended." said Gregory Klump, CREA's Chief Economist.
Love those rose-colored glasses Gregory.
So what is happening with housing statistics in Canada?
For those looking for easy answers, check out the mainstream media, who seem to be in the press release rewriting mode. In some cases they don't even disguise their laziness. It's Press Release Verbatim!
That probably works for your maiden aunt and those Low Information Readers.
For the rest, you will have to do some digging to come up with the real Real Estate Data.
Don't go making huge real estate buying decisions based on data released by realtors and Real Estate Associations whose main goal is to separate you from your hard-earned money. By buying/upgrading/enhancing your lifestyle.
Is now a good time to buy? Will prices ever go down? Can I afford to wait?
If you are an affluent and successful boomer, perhaps now is the time to sell. Before all the other boomers get wise to a declining market?
Evaluate all those housing statistics carefully.
Who is promoting that data? What's in it for them? Are they looking out for you? Or for themselves?
Do they have a vested interest?
The information is out there. It requires some effort. Are you prepared to spend a few hours to save thousands? Your call.
Spend some time and effort now or lose many dollars later. Your choice.
That was a bold and impressive statement which, if true, could spur people to embrace the "buy now or be priced out forever" meme which seems to be so popular in your industry. It was predictable that some sceptics might look a little more closely at the statistics which support your claim - they did and the data appears to be flawed.BC Homes sales posts strongest October in the last 4 years.
The reference to "an apparent falsehood" screams for a convincing rebuttal and, although I enjoy reading your completely unrelated responses to Taipan's bad guesses, they don't address the issue of accusations about the real estate industry fudging its numbers.Susan’s note reached me the same day CREA pushed its latest numbers onto the media, creating the meme of a vibrant real estate market. Sales in August jumped 11.1% from the same month last year, the realtors said, and prices are ahead 8.4%. Unknown, though, is the number of sold houses which were counted two or three times, as listings were double- and triple-listed on various boards, as I showed you last week.
Also, are the headline numbers even accurate? Are they correct? Would people reading them be lulled into believing it’s okay to buy a house at an inflated level, because the market’s strongly rising? If so, would they be misled?
It’s hard to tell. CREA said on Monday, “National home sales rose 2.8% from July to August.” But this is apparently untrue. Here are the realtor’s monthly reports for June, July and August. Read each and you’ll be able to determine the total number of monthly sales across Canada. In July 44,797 properties changed hands. In August, deals totaled 40,315. Yup, that’s a 10% decline – not a 2.8% increase. The magnitude of the ruse is significant Not a rounding error, or a difference of interpretation, but an apparent falsehood.
Wow, touchy, touchy, did I hit a raw nerve?The point is there is a lot of discussion not backed up with facts.
The main reporting for stats comes from the Real Estate Boards. You show me a couple of articles that you belive is fact.
You believe what are your facts and I'll believe in mine. If the boards info is all wrong why bother reading them.