Personal Finance

[Sizzling] Hot Real Estate Markets - September 2014

  • Last Updated:
  • Oct 3rd, 2014 3:37 pm
Sr. Member
May 26, 2010
575 posts
JHW wrote: 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.
The simple solution to this would be to take a rolling 12 month average of % of sales which did not complete, and apply that against the latest month for the sales increase/decrease, as it would provide a more representative picture of the market, but as you said they have a vested interest so there really is no reason for them to care.


Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)