Analyst questions CREA stats

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One industry analyst is questioning how the Canadian Real Estate Association (CREA) reports its home sales data, suggesting his own analysis points to a less frenetically-paced market.

"The housing prices that you see, the multiple bidding in Toronto, it is all an artificially created environment,” Ross Kay of Ross Kay Realty Consultants told REP. “The consumer is told the market is busier than what it is; they’re told there are more homes for sale than there really are.”

As evidence of his theory, Kay points to CREA’s January numbers, which report 4,135 sales for all of Toronto. Toronto Real Estate Board (TREB), itself, also reports a total of 4,135.

TREB includes Mississauga, Orangeville and district, Milton, York region and Durham region sales within its 4,135. CREA, meanwhile, includes the 4,135 total and each region’s individual tallies for Ontario’s total; essentially reporting some numbers twice, according to Kay.

However, there is a simple explanation for this, according to CREA economist, Chris Jokel, who said the total reported for all of Ontario does not count GTA regions numbers twice.

“So you end up with 11,002 (for the sum of all regions),” Jokel told REP. “The actual Ontario total we are displaying is 9,298 because it doesn’t double-count those Toronto areas; basically, we just include them in the table so people can see how the numbers are broken down.”

Still, Kay is unwavering.

CREA noted that to arrive at 9,289 they had to remove partial totals of reporting overlap from some boards  — specifically TREB — (but) they failed to remove all of listings directly tied to that disclosure and the result was a remaining over reporting of 6.5 per cent for this one issue alone,” Kay said. “When you adjust the 2013 January count using the same criteria you have Ontario January 2014 as a 7.7 per cent decrease versus 2013.

“I know that is not a large difference (only another 1.5 per cent) but this is on one issue alone in one province.”

Kay’s firm claims to be “independent of any and all fiduciary duties related to MLS system data, allowing for full independence, open and full disclosure and finally data review that is statistically valid” and he claims to be the only analyst who doesn’t use CREA’s data.

“Will Dunning is used by CAAMP and Will uses the numbers right from the Canadian Real Estate Association,” Kay said. “Every analyst uses CREA’s data; we’re the only who doesn’t use CREA’s data, we use our own, so when we’re making a comment it is factual – my entire reputation is the name of the company."

And according to Kay, relying on CREA's numbers has caused inflation in prices and an unnecessary fervor for homeownership in Canada.

“In terms of looking at the market realistically, trying to extrapolate any trends, trying to forward predict what is happening, trying to make some common sense of the absurdity of the market that we see right now; there is no logical sense that buyers are running out there on declining volumes and entering bidding wars,” Kay said. “The only reason they are doing that is because they are being told the market is busier than what it is.

“We’re in a full-blown housing bubble we haven’t seen since 1990 and I only started using that term in January of this year.”