First, a couple of notes. One I am happy to report, one I am not.
Feeling culturally deprived, the smart people at Mount Royal University in Calgary have invited me to come and give a lecture later this month. As a humanitarian gesture, I accepted. And while the event is open only to invited guests and students, I have also accepted an invitation to give a talk for Chapters on Thursday October 21st That one’s entirely public. So to all those on this unruly site who have been yipping at me to put on my cowboy boots with the pink flames and visit, there ya go. Details below.
Not so happily, I report the miserable blog you are reading has been the subject of more attacks in recent days. Called DOS, these assaults attempt to deny service by overwhelming the site with a massive flood of simultaneous requests which flow in from an army of slave computers. My webmaster and his team of Humvee-driving, armed-to-the-teeth commandoes have been successfully repelling the invaders, but from time to time the little pricks succeed. If you have trouble loading the site, just be patient and think of attractive allegorical women in negligees.
Well, the humpers and pumpers at BNN had their shorts in an excited knot yesterday upon news the latest Teranet-National Bank Composite Home Price Index showed house prices are going up. Huh?
Of course this was interpreted as all the evidence any good journalist would need that real estate has cast off the mantle of imminent death and is into its second renaissance in the last three years. As evidence: Prices of homes in the six biggest urban areas are up 12% from a year ago (well, from last July), and this is the 15th monthly advance.
Let’s dig a little deeper.
First, this survey is two and a half months old and one hell of a lot can happen in that period of time with an asset as volatile and emotional as real estate. As you know, sales have been sliding in the biggest markets of Toronto and Vancouver for four months now – a pattern I fully expect to see continue when the latest stats are out next week.
Second, the monthly price increase was one half of one per cent in July – the smallest since last March. This is a decelerating market, not one gaining strength.
Third, prices actually dropped in Vancouver from the month before, while in Halifax, Calgary and Montreal there was virtually no change. In Toronto, July prices beat June by 1.2%.
Fourth, that jump in housing activity in Toronto was likely the result of pre-HST sales activity, since virtually every realtor with a condo to flog was telling clients they had to ‘beat the tax’ even the harmonized sales tax was inconsequential. Sadly, a lot of people so deprived they never read this blog actually believed it. They bit.
Lastly, while I applaud the Teranet-NB index guys for trying to pull off a Canadian version of the Case-Shiller in the States, the data we’re being provided is both dated and suspect. Americans have constant access to various sources of market info (such as Zillow), and organizations like S&P actually do original research, rather than depending on the National Association of Realtors (the USA version of CREA) for their numbers. Maybe if the Competition Bureau is successful in loosening the grip of the real estate cartel in Canada, some entrepreneurs will start giving us real-time and unskewed views of housing’s health. That would be cool.
The bottom line: once again the MSM is filled with distortion and half-truth. A picture of an improving real estate market is painted at exactly the time it’s losing altitude. This is the equivalent of what the gold pumpers try to do every two or three days on this blog – encouraging people to buy an asset at the most expensive price in history on the absurd belief it will go up forever. Sane people will tell you this blows. You buy low and sell high.
Say, has the attack started yet? I feel like shooting something.