In our last post we talked about the media coverage of the August 2012 real estate statistics in our little hamlet on the Edge of the Rainforest.
In their effort to manage the bad news, the Real Estate Board of Greater Vancouver (REBGV) put on a brave face and did their best to spin the dreadful results. The REBGV President said:
"Home sales this summer have been lower than we’ve seen for most of the past 10 years, yet we continue to see relative stability when it comes to prices."
Sales were abysmal but the REBGV desperately grasped at 'the price straw' as their last hope.
They call it "price stability."
And by price stability, the REBGV means their precious Home Price Index. The group’s composite benchmark price for all residential properties in Greater Vancouver is $609,500 which they tell us is down 0.5% from a year ago and 1.1% from July.
But faithful reader, P.C., takes issue with this claim.
I really enjoy reading your blog and I read it every week.
This is a note about that the Real Estate Board of Greater Vancouver incorrectly stating that the MLSLink Housing Price Index DROPPED 0.5%. THIS IS INCORRECT, IT SHOULD BE A 2.5% decline. Media outlets have followed the REBGV's "party line" of a 0.5% price drop.
I am basing the MLSLink® Housing Price Index (HPI) benchmark prices from pages published by the REBGV's own website in 2011 and 2012.
These websites mention that the August 2012 MLSLink® Housing Price Index (HPI) benchmark price was $609,500 while the Aug. 2011 MLSLink® Housing Price Index (HPI) benchmark price was $625,578.
So a simple calculation of $609,500 divided by $625,578 yields 0.9743 or a price decline of 2.5% NOT 0.5%.
I have contacted the REBGV people to ask them to issue a correction about this incorrect fact. I hope you and your readers will press them to correct their figures and pressure them to issue a news correction. Housing price numbers should be published correctly.
Thank you for your interesting articles, and keep up the good work!
So what do you think gang?
Is P.C correct?
Has the REBGV misrepresented the HPI decline in prices for August?
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Busted.
ReplyDeleteAnd the RE industry claim to be "professionals"... is that professional liars? I wish the MSM would get on this juicy story.
ReplyDeleteIf only they would use this math to figure out their commissions...
ReplyDeleteThis has been dealt with a number of times. The benchmark price was adjusted so that year-over-year percent changes lined-up with the HPI index number. The HPI index did not change, but the benchmark prices were revised.
ReplyDeleteYou need to ask yourself what is more likely - that a new price index required fine tuning post-launch or that the entire real estate industry is involved in an elaborate cover-up in spite of their oft-cited incompetence.
Saw this one from Greaterfool.ca (Garth Turner)... makes you wonder whether the drop was 0.5, 2.5 or 9.2%!
ReplyDeleteVancouver’s real estate board is the home of the original Frankenumber, the MLSLink® Housing Price Index (HPI) composite benchmark price, blatantly intended to smooth out peaks and valleys, giving the impression of an eternally stable market. So while the average detached SFH has lost $200,000 in value in recent months, the Frankenumber stays serene. In August, for example, “the decline of 0.5% compared to this time last year and a decline of 1.1% compared to last month.”
Could this be because the Real Estate Board of Greater Vancouver secretly did an organ transplant when nobody was watching? Well, nobody except for the poster called Canadian Watchdog. “REBGV revised last year’s benchmark prices lower again. I had all their website data copied from earlier this year and sure enough, when I checked today’s detached home price for last August, it was revised below $1M, otherwise it would have posted a 9.2% decline, not -0.5%. It’s useless. They’re doing everything they can to smooth out data before the coming cliff in Q1 2013.”
The revision was done months ago and an explanation of the methodology was posted. Not sure how much more transparent they could be. Also, it isn't generated by the REBGV, but by Altus Group, and it is for multiple boards across Canada.
ReplyDeleteThe question I would have would be what changes were made to the attributes of the "typical" property where the "typical" property in Vancouver actually went down. With all the new builds and renos being done on homes these days, why would the HPI for Aug 2011 drop from $625K to $612k in the new calculations? This part of it doesn't make sense to me.
ReplyDelete