“The negative side of forecasting is what I call economic hyperbole,” he says. “You actually can hurt people by producing forecasts that are designed to just get headlines.”
Institutions across the globe have issued one report after another, calling Canada’s housing market overvalued by upwards of 60 per cent. Agents commenting in the REP forum, however, saw through the flawed reports and pointed directly to the data’s broad brushstrokes.
“Not having your feet on the ground and appreciating fully the nuances and forces of local markets,” wrote one anonymous commenter, “excludes IMF even from a list of hopeless experts similar to those that work for at least Canadian banks.”
For his part, Soper considered how the traditional markers of a successful industry aren’t quite applicable in real estate.
“Our market does rise and fall; it isn’t always accompanied by a significant change in home prices,” he says. “But the number of homes changing hands in our market rises and falls. Certainly, in the car industry, that would be an indication of a healthy market.”
By that account, though, the Canadian real estate market isn’t doing so well. The Canadian Real Estate Association reported a two per cent drop in home sales in January, though housing prices were up 3.1 per cent year-over-year.
CREA president Beth Crosbie pointed to Alberta’s faltering energy sector for the national decline, though most other provinces recorded increases in sales.
“As expected, consumer confidence in the Prairies has declined and moved a number of potential homebuyers to the sidelines as a result,” she said. “By contrast, housing market trends in the Maritimes are continuing to improve, which underscores the fact that all real estate is local.”
Speaking at an Empire Club of Canada event last week, Phil Soper, the president and CEO of Royal LePage, called on real estate companies and financial institutions to issue market forecasts with an abundance of caution.