Home price slide may be over-stated.
Canadian home prices cooled last month, but the depth of the correction may have been exaggerated by distorted data, says...TD Securities Inc.Here we go; if you don't like the numbers, just change 'em, or at least, change the way they are interpreted. This same thing has been done with inflation numbers, unemployment numbers (if you are not receiving benefits, or have given up in despair, you are not unemployed!), and who knows what else. It is just so much Newspeak - a la 1984. The stock market has not really crashed since July, it is up significantly since 1934! Trillions have been made! You are not really older than you were 20 years ago, your hair is not grey, and you don't really weigh more than you did in high school - you are actually younger than your parents! (and your hair less grey), and you weigh a lot less than Luciano Pavarotti! There, don't you feel better now?
The average price of a resale home across the country's 25 major markets fell by an estimated 6.2 per cent year-over-year in September, according to a report last week from the Canadian Real Estate Association (CREA).
The decline was larger than many market watchers had expected, and added to fears the Canadian housing market could go into a U.S.-style freefall.
However the price drop was led by a 43 per cent plunge in the number of homes sold last month in Vancouver, the country's most expensive market.
“The crux of the issue is that unless the underlying cities are properly weighted...the results can be biased by dramatic changes in the volume of the sales in certain cities,” said the report by TD economists Millan Mulraine and Eric Lascelles.
Currently, the average existing home price is calculated by using an average that gives each city a weighting based on its contribution to overall sales, Mr. Mulraine said. TD recalculated the data by fixing the weighting to last year's data instead, which is a more standard method of calculating year-over-year comparisons for economic data, he added.
Under the new weighting system, last month's average existing home price decline would be a more moderate 1.3 per cent from Sept. 2007, the TD report said.
Prices 8% less than last year are prices 8% less: who gives a flying fig what the volume of sales is?