Everyone is watching Canada’s sputtering housing market these days. Is it the beginning of a crash, or a much-hoped-for soft landing? Every piece of new data is thrust under the microscope. But if you happen to live in Canada’s largest city, you should view the monthly sales figures served up by the Toronto Real Estate Board with an extra-critical eye.
Last week, the board issued a hopeful-sounding press release. After several months of falling sales—down 20 per cent in December—it said the first two weeks of January suggested a mood shift. Sales were up 2.4 per cent to 1,469, compared to the 1,435 reported a year earlier. Prices were up, too—by four per cent, to an average of $459,728 across the Greater Toronto Area, or GTA. “The new year started off on a positive note with residential sales slightly above last year’s levels,” Toronto Real Estate Board president Ann Hannah said in a statement. “I am cautiously optimistic about this result.”
Just one problem: Garth Turner, a former MP and a vocal housing bear, noted on his blog that TREB actually reported a total of 1,506 sales during the first two weeks of January 2012—not 1,435. That’s 71 fewer homes sold this year than last, or a 2.5 per cent decline. Why the discrepancy? TREB spokesperson Mary Gallagher says some home sales end up falling through each month—perhaps because buyers get cold feet, or because their offers were conditional on financing or home inspections. “We’ve chosen in the past couple of years to revise our figures going forward,” Gallagher says, pointing to a tiny footnote that accompanies TREB’s market reports. “We’re not hiding it.”
Even so, it’s not an apples-to-apples comparison. By measuring this year’s initial sales with last year’s finalized deals, TREB’s efforts to track the monthly performance of a key market—both sales and prices—is generally inflated by a percentage point or two, according to a review of its monthly releases. Gains look more impressive and slumps seem less serious. And during the first two weeks of 2013, it suggests a housing market stirring back to life when, in fact, the opposite is probably true.