By Win Wachsmann. 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)
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 hereHow 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’sPress 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.
Follow Win Wachsmann on Twitter: www.twitter.com/winw