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[Sizzling] Hot Real Estate Markets - September 2014

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  • Oct 3rd, 2014 3:37 pm
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[OP]
Deal Fanatic
May 1, 2012
8228 posts
5504 upvotes
Markham

[Sizzling] Hot Real Estate Markets - September 2014

Canadian Regional Real Estate Market Watch: September 2014


Toronto
Sales up 10.9% YoY
Prices up 7.7% YoY
DOM down to 25 days (from 27 days in 2013)
Bonus: Condo prices up 9.2% YoY

Vancouver
Sales up 17.7% YoY
Prices up 5.3% YoY

Calgary
Sales up 12% YoY
Prices up 10.8% YoY
DOM down to 34 days (from 42 days in 2013)
Bonus: Condo sales 21% higher YoY and prices up 7%.

Edmonton
Sales up 9.2% YoY
Prices up 6.9% YoY
DOM down to 49 days (from 54 days in 2013)

Victoria
Sales up 16% YoY
Prices up 1.5% YoY

Historic Appreciation for Toronto Prices since:
2004 up 83%
2008 up 51%
2010 up 33%
2012 up 15.4%

Toronto Crash Projections:
Prices need to crash 15% in order to reach 2011-2012 level.
Prices need to crash 30% in order to reach 2009-2010 level.
Prices need to crash 50% in order to reach 2002-2003 level.


The rest of the country has seen their markets basically flatline or struggle. So this is very much a regional RE run than it is a national.

*DOM: Days on Market
15 replies
Deal Addict
Nov 24, 2004
3765 posts
459 upvotes
Toronto
The YOY percent sales increases are systematically inflated by a few percentage points, so take those numbers with a bit of salt. But in any case, maybe you should ask that this thread be merged into the other Real Estate threads.
[OP]
Deal Fanatic
May 1, 2012
8228 posts
5504 upvotes
Markham
JHW wrote:
Oct 3rd, 2014 10:48 am
The YOY percent sales increases are systematically inflated by a few percentage points, so take those numbers with a bit of salt. But in any case, maybe you should ask that this thread be merged into the other Real Estate threads.

You should probably explain your "systematically inflated" argument. Otherwise, you shouldn't make that claim.

This is about September regional numbers, not mindless bickering about RE vs renting. I fail to see why this needs to be merged.
Penalty Box
Apr 16, 2012
3565 posts
683 upvotes
Greely
JHW wrote:
Oct 3rd, 2014 10:48 am
The YOY percent sales increases are systematically inflated by a few percentage points, so take those numbers with a bit of salt. But in any case, maybe you should ask that this thread be merged into the other Real Estate threads.
Yes, percent sales and prices are systematically inflated every year...

hence today average single home selling for $950,000 has been systematically inflated all along when the real selling price is actually $500,000.
Deal Addict
Nov 24, 2004
3765 posts
459 upvotes
Toronto
Anikiri wrote:
Oct 3rd, 2014 11:03 am
You should probably explain your "systematically inflated" argument. Otherwise, you shouldn't make that claim.
Sure.

When TREB reports its % sales figures (such as the YOY sales increases you posted above), it always reports the increase as a ratio of the preliminary sales number from the current month to the final sales number of the same month in the previous year. Because a small but non-zero fraction (usually around 5%) of those preliminary sales end up falling through, the effect is to give a "perma-boost" of a few percentage points to the YOY sales figures. It's not huge, but it's there.

I was skeptical when I first read about this, but on checking out data from the TREB press releases, it is real. I can provide an example with data, if needed.

I can understand why TREB does this, as they want to provide a number as quickly as they can, and they are more of a marketing organization than a statistics-gathering firm.
[OP]
Deal Fanatic
May 1, 2012
8228 posts
5504 upvotes
Markham
JHW wrote:
Oct 3rd, 2014 11:39 am
Sure.

When TREB reports its % sales figures (such as the YOY sales increases you posted above), it always reports the increase as a ratio of the preliminary sales number from the current month to the final sales number of the same month in the previous year. Because a small but non-zero fraction (usually around 5%) of those preliminary sales end up falling through, the effect is to give a "perma-boost" of a few percentage points to the YOY sales figures. It's not huge, but it's there.

I was skeptical when I first read about this, but on checking out data from the TREB press releases, it is real. I can provide an example with data, if needed.
If I am understanding you correctly, you are talking about a few percentage points of the percentage I've listed.

i.e 5% of 9.5% growth

Given your example, that uncertainty level can be plus or minus, hence not necessarily inflated, but both inflated/deflated.

In other words, it's not a big deal.
Penalty Box
Apr 16, 2012
3565 posts
683 upvotes
Greely
It's a big deal when you need to grasp straws because that's all some RE bears are able to grasp.
Deal Addict
Nov 24, 2004
3765 posts
459 upvotes
Toronto
Anikiri wrote:
Oct 3rd, 2014 11:42 am
If I am understanding you correctly, you are talking about a few percentage points of the percentage I've listed.

i.e 5% of 9.5% growth

Given your example, that uncertainty level can be plus or minus, hence not necessarily inflated, but both inflated/deflated.
No, it's more like a few percentage points of that 9%, and in practice it is always an inflation, as reported deals fall through far more than successful deals go unreported.

Let me provide an example:

TREB stats from early August 2012 reported 7,570 sales in July 2012, compared to 7,683 sales in July 2011. This represented a decrease of 1.5%.

TREB stats from early August 2013 reported 8,544 sales in July 2013, compared to 7,338 sales in July 2012. This represented an increase of 16.4%. Note the discrepancy between the two numbers cited for July 2012. The number reported in 2013 is a revised figure that accounts for the deals recorded in 2012 that later fell through.

When you use that revised figure for July 2012 sales, you find that the YOY change in sales from 2011 to 2012 was not -1.5% as originally reported, but actually -4.5%.

You can go through the 2014-reported data on July 2013 sales and find the same result. The 16.4% increase is more like 13-14%. Still impressive, just not as much. Basically the same phenomenon every month, as the YOY sales numbers get a boost of a few percent.

Does it matter in the long run? Probably not. It is just something to be aware of, because it is systematic and always there. Even a flat YOY market would be reported as one in which sales grew 3-5%, just because of the methodology. Again, TREB wants to get the data out quickly (not wait until October to report July numbers), and they are a trade / marketing group, not an economic analysis firm, so it doesn't negatively impact their business to report the data this way.
Deal Addict
Dec 31, 2006
1299 posts
239 upvotes
Boom buy buy buy
I am a friendly Koodo customer and AMEX customer.
Deal Addict
Sep 5, 2009
2945 posts
1118 upvotes
These numbers are real. In August I was getting a house ready for sale. Comparables at the time indicated a high selling price would be $680,000. We listed and sold in September for $50,000 more than that. The market went nuts in September.
[OP]
Deal Fanatic
May 1, 2012
8228 posts
5504 upvotes
Markham
fdl wrote:
Oct 3rd, 2014 1:47 pm
No traction on that thread. I should have added the word sizzling to the title :) .
My bad fdl, I actually skimmed through the first page but didn't see your thread. Grats on your house worth 10% more.
Deal Fanatic
Dec 5, 2009
5045 posts
2829 upvotes
Anikiri wrote:
Oct 3rd, 2014 1:55 pm
My bad fdl, I actually skimmed through the first page but didn't see your thread. Grats on your house worth 10% more.
No worries. your thread covers more than just TREB anyways.

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