Something fishy with Kelowna stats?
In Kelowna and Vernon, this year’s real estate sales may be less rosy than we have been led to believe, according to the Okanagan Mainline Real Estate Board’s (OMREB) published statistics.
The OMREB statistics can be found on their website:
http://www.omreb.com/page.php?sectionID=2
In my review of the OMREB statistics, I came across several numbers that quite literally do not add up. These incorrect numbers were also repeated in their media releases.
I noticed that the YTD dollar sales figures in many categories do not match the sum of the monthly figures. In almost every case, I found a rather large discrepancy (as much as 11.23% in the case of Central Okanagan Townhouse sales). The YTD sales numbers give the impression that the sales this year (in dollars) are much better than the monthly sales numbers indicate. I noticed that almost every month this year had this problem, but that it did not occur in the 2009 statistics.
I’m sure that this discrepancy is just an error and that they’ll correct it immediately, so as to give an accurate picture of the market to those considering buying or selling a property. Because we’re nearing the end of the year, I would not be surprised if the incorrect November YTD sales figures are not exceeded by the real December YTD dollar sales figures.
I’m not sure how OMREB will be able to correct the numbers, short of re-calculating the YTD numbers for the entire year. As an alternative they could show December dollar sales as zero (or negative), to allow the numbers to match, but that might make the December month-over-month and year-over-year numbers look really bad, in addition to making the slump in sales compared to 2009 more obvious.
Providing the correct YTD dollars sales numbers is especially important in this declining market, because this year’s incorrect (inflated) YTD figures will make next years comparative sales look worse than they should.
The numbers that I am using can be found within the OMREB statistics. For example, on page 8 of the November 2010 Central Okanagan statistics report, the Residential Total Current YTD sales are shown as $1,315,905,989, yet the sum of all the monthly totals from their 2010 reports add up to $1,244,919,850.00, which is a difference of $70,986,139.00, or 5.70%.
In the Central Okanagan, the discrepancies are:
Grand Total Current YTD Sales
- Published number is 5.48% above the calculated number
Residential Total Current YTD Sales
- Published number is 5.70% above the calculated number
Residential Current YTD Sales
- Published number is 5.61% above the calculated number
Apartment Current YTD Sales
- Published number is 4.01% above the calculated number
Townhouse Current YTD Sales
- Published number is 11.23% above the calculated number
In the North Okanagan the discrepancies are:
Residential Total Current YTD Sales
- Published number is 7.82% above the calculated number
Residential Current YTD Sales
- Published number is 8.33% above the calculated number
Apartment Current YTD Sales
- Published number is 5.50% above the calculated number
Townhouse Current YTD Sales
- Published number is 5.94% above the calculated number
I considered that there may be some collapsed sales, waterfront property, late reported sales, changes in sale price, etc, which may have influenced the monthly numbers, so I compared the 2010 figures with the 2009 figures, using the same methodology, and found that there is not the same consistent level of error that I find within the 2010 YTD numbers. In fact, I did not find any error in the 2009 YTD numbers, other than a few small math errors, which did not affect the YTD numbers vs. the sum of the monthly numbers.
In many cases, I noticed a consistent upward bias to the published YTD numbers throughout the year. For example, in the North Okanagan, published Residential Sales numbers YTD compared to the sum of the monthly numbers are:
February – 4.66% higher
March – 7.47% higher
April – 6.94% higher
May – 8.49% higher
June – 9.56% higher
July – 8.81% higher
August – 8.18% higher
September – 7.56% higher
October – 8.55% higher
November – 8.33% higher
Perhaps the published monthly numbers are lower than they should be. (I cannot see why they would be in a declining market; I suspect that the OMREB would want the numbers to be as rosy as possible). Another possibility is that there has been a change in the YTD calculations since 2009. Yet another possibility is that there is some recent systematic bias that makes the YTD numbers appear larger than they should be.
I’m curious as to how the OMREB intends to resolve this. At the moment I’m not sure which of their published numbers I should trust.
This post was submitted by Alpha_Bear.
Click here to view all comments chronologically
December 9th, 2010 at 8:27 pm
@Anonymous:
He hits the nail right on the head. Canada is living beyond its means despite historically high commodity prices. Irrefutable evidence that the country as a whole is running on a bubble economy.
And remember again, what looks bad for Canada as a whole looks a lot worse for BC.
December 9th, 2010 at 8:18 pm
@Yalie:
No there won't. The political push will be in the opposite direction – to maintain government guarantees on mortgage lending to keep house prices from falling further. Just like in the US.
But just like in the US, it won't work in the long run.
December 9th, 2010 at 3:37 pm
Google Maps Foreclosure Listings
1. Punch in any US address into Google Maps.
2. Your options are Earth, Satellite, Map, Traffic and . . . More. (Select “More”)
3. The drop down menu gives you a check box option for “Real Estate.”
4. The left column will give you several options (You may have to select “Show Options”)
5. Check the box marked “Foreclosure.”
December 9th, 2010 at 2:59 pm
@jesse:
September 2008 to be precise. I was in before the rush:
http://www.google.com/trends?q=quantitative+easin… http://www.google.com/trends?q=quantitative+easin…
http://vancouvercondo.info/2008/09/bail-out-fail-…
December 9th, 2010 at 2:42 pm
Here are Larry's numbers for today.
Vancouver East & West*
New Listings – 18
Back On Market Listings – 0
Price Changes – 10
Sold Listings – 29
Vancouver All Areas*
New Listings – 88
Back On Market Listings – 6
Price Changes – 29
Sold Listings – 74
*Attached & Detached – Date: 12/09/2010 Time:17:48 Pacific
December 9th, 2010 at 2:14 pm
@Dave: "QE was all over the internet by the time I was talking about it here."
Thanks for the clarification. We need to be clear what qualifies as soothiness.
December 9th, 2010 at 2:11 pm
For FFA tomorrow if it wasn't already posted: Global risks rising: Bank of Canada
December 9th, 2010 at 2:11 pm
@Dave:
If people laugh off everything you say it's because it's easier than sorting through the 99% crap you throw out Dave. The boy who cried wolf and all that. Maybe if you thought through your positions for more than a few minutes this wouldn't happen to you.
December 9th, 2010 at 2:08 pm
@Dave:
"I was talking about Quantitative Easing on VCI about three years ago."
Google says no.
But you enjoy lies don't you Dave.
I defy you to point to the place where you talked about quantitative easing. It doesn't exist prior to 2010.
December 9th, 2010 at 2:01 pm
@jesse:
I agree. QE was all over the internet by the time I was talking about it here. My point wasn't to say that I was early in predicting this. I wasn't.
December 9th, 2010 at 1:49 pm
@Dave: "QE was used before I was born."
I knew you were born yesterday.
Anyone who knows Ben Bernanke's nickname would have no trouble predicting QE a few years ago. And just so we get the timing right, QE1 was looking a shoo-in as early as August 2008 and there were rumblings from FOMC and Treasury speeches even before that. That's over 2 years ago now.
December 9th, 2010 at 1:38 pm
@Renting:
And what, you think they are doing it to slow the economy?
QE was used before I was born.
December 9th, 2010 at 1:31 pm
Dave, Ok, so your blog is a mess, just find another hobby.
December 9th, 2010 at 1:26 pm
Six weeks later, the bond program looks more like a water pistol than a cannon—and the reasons explain the immense and strange challenges of steering monetary policy in the aftermath of a financial crisis when short-term interest rates are already near zero.
Markets Defy Fed's Bond-Buying Push
December 9th, 2010 at 1:09 pm
Ya OK Dave. Keep the curve flat. Right.
Not only did you predict it, it was actually your idea. That is what Ben told me over lunch yesterday. He got the idea from your post on the VCI blog. Without you Dave the world would be done.
December 9th, 2010 at 12:54 pm
@Troll, "Here’s another prediction. In 6 months you’ll still be a raging idiot, no matter what happens to rates."
Oh, pleez, give it up. My 11-year-old daughter comes up with better insults than that.
December 9th, 2010 at 12:26 pm
@Best place on meth: Here's another prediction. In 6 months you'll still be a raging idiot, no matter what happens to rates.
December 9th, 2010 at 12:21 pm
@Best place on meth:
Dow – 11,500 to 12,500
Gold – $1,350 to $1,550
Nat Gas – No idea.
Keep rolling on the floor. We both know which one of us is truly laughing.
December 9th, 2010 at 12:12 pm
@jesse:
I am bullish on the US as well. I just think it's going to be a slower recovery this time around. I think things will be looking better in a couple years.
And yes that will mean higher interest rates.
December 9th, 2010 at 12:06 pm
@Dave:
I wouldn't know where to start with you, NostraDavus.
You've already predicted everything so I'll just keep rolling on the floor with each and every hysterical post.
Hey Dave, before I let you go would you mind giving me the closing levels for the Dow, gold and natural gas 6 months from now?
Thanks a bunch.
December 9th, 2010 at 12:02 pm
@Dave: "Until they do, both short and long rates will remain low"
But for how long? Weekly unemployment claims in the US have fallen significantly in the past month. The recently announced increase in depreciation allowances in the US positive for private investment. For the tens of millions of people looking for full time jobs that's good news and I think bond yields are agreeing.
When people think "slow recovery" they think Japan a la decades in length. I think that's woefully pessimistic; the US has been successfully de-leveraging for a few years now. With their property prices relatively low I see residential investment starting to pick up in a year or two. Then it's off to the races. I'll leave it to the imagination what happens in that scenario.
December 9th, 2010 at 11:59 am
@Best place on meth:
Got something to contribute? Please point out what I have been incorrect on, other than a typo. Weak sauce dummy.
December 9th, 2010 at 11:56 am
#71 Best place on meth Says:"It’s like listening to Sarah Palin talk foreign policy."
Maybe Dave's hoping QE would prop property prices as well as it has in the States?
December 9th, 2010 at 11:51 am
@jesse:
Yes, they will as long as inflation remains low. I think we are in a prolonged economic downturn and it will take time for the US to pull themselves out of it. Until they do, both short and long rates will remain low, whether by QE or not.
I think our economy will continue along just fine, but our growth will be constrained by the high dollar and the slow US economy. I see positives in that though. I think this will force many of our companies to diversify outside of the US a little. BC has done well already, but hopefully that will continue.
December 9th, 2010 at 11:49 am
Dave, Troll,
Thanks for all the laughs today.
You stupid motherfuckers have caused my sides to split with your hilarious analysis of the bond market.
It's like listening to Sarah Palin talk foreign policy.
Kudos, asshats.
December 9th, 2010 at 11:42 am
@Dave: "I predicted [QE] was coming and like usual, I was attacked for it. But low and behold it happened."
So will the government continue to monetize debt to keep interest rates low? What does the future hold for us now, O great economic soothsayer?
December 9th, 2010 at 11:39 am
A tastey excerpt from Garth's latest post:
December 9th, 2010 at 11:36 am
@Troll: "Point of the article is that Canada is seen as safe haven, there will be strong demand for Canadian bonds"
The article doesn't point to anything keeping Canadian bond yields significantly below their peers for a prolonged period. I'll take the "under" on the article's thesis over the next 5-10 years. I know Mark Carney is.
December 9th, 2010 at 11:31 am
@Renting:
They are doing it to keep the curve flat and to spur economic activity.
I was talking about Quantitative Easing on VCI about three years ago. I predicted it was coming and like usual, I was attacked for it. But low and behold it happened. It would be fun to dig up those posts.
December 9th, 2010 at 11:26 am
@McLovin:
I meant to type in a low inflation environment.
December 9th, 2010 at 11:17 am
The slut has flipped at least 19 properties.
If, he is in fact renting,like many of us bears,he must have thought the bubble was overdue for a popping, back in 2006-2007, but like all other bubbles before, it is almost impossible to time it perfectly.
December 9th, 2010 at 11:14 am
WRT to topic at hand, I wonder if the Okanagan Real Estate board will even acknowledge this? It it worth alerting the local MSN or will they bury it due to the amount of advertising real estate brings them?
December 9th, 2010 at 11:11 am
Alright, Dave is officially "dead" to me
Just like the Vancouver Real estate market.
December 9th, 2010 at 11:06 am
@McLovin:
It means rates won't rise because rates are low. In other words, rates will be low because rates are low.
…
/head explodes
December 9th, 2010 at 10:54 am
No Dave you just do not know what you are talking about. Your assumption is if the banks buy more bonds instead of lending the money the price of the bonds will drop due to the increased demand. Banks have been buying bonds forever. Dave check out the size of the bond market compared to the mortgage market. It wouldn't make the slightest dent.
December 9th, 2010 at 10:44 am
Dave " Come back and tell me how the BOC can raise rates in a low interest rate environment."
What the hell does this even mean?
December 9th, 2010 at 10:43 am
Dave since you are a bond guy maybe you can help me out.
Why is the US Feb buying bonds right now? According to Bernanke it is to keep bond rates low. In other words if they didn't buy them bond rates would rise. But according to you this cannot happen since the Fed controls short rates and bond rates follow short rates.
Bernanke: "The Fed's purchases are intended to lower long-term interest rates"
http://www.kgw.com/news/business/111355789.html
Please explain Dave. Also please call Ben and let him know QE2 is all a big mistake and he is doing it for nothing as bond rates cannot rise without him raising short rates first.
December 9th, 2010 at 10:38 am
One of the fiercest critics of the U.S. Federal Reserve is slated to take over the government committee that oversees the central bank, a move that’s bound to spell a lot more scrutiny.
<a href="http://www.financialpost.com/news/this+kill/3954316/story.html" rel="nofollow">Can this man kill the Fed?
Love him or hate him…this will be interesting to watch. Yes it does matter here in Canada…..what happens with the Fed, happens here….RTP
December 9th, 2010 at 10:37 am
@Yalie:
I mostly agree with what you are saying. Both are a function of the economy and risk. The overnight rate is basically the 'risk free rate'. Holding a bond for longer than overnight creates a real risk, which requires a commensurate return. That's why long bonds yields are priced based on short yields. Both are really functions of the economy though.
So back to my point… it's BS to suggest that long rates are going to continue going up, absent a rise in short term rates. The curve is already steep and it doesn't have much room on the upside. Again, the BOC is not going to raise overnight rates.
What does that then imply about 'affordability' and prices? Well, you already know that.
December 9th, 2010 at 10:31 am
@Renting:
…. However, keep in mind WHEN BONDS RISE… the banks will JUST BUY BONDS…
Your logic contradicts itself.
December 9th, 2010 at 10:30 am
Dave, your argument amounts to "correlation equals causation". Yes, long-term rates have generally been within a few percentage points of short-term rates. But you can't assume that one causes the other. It's just as likely (as "Renting" describes) that central banks follow market rates, and not the other way around.
In any case, if it were true that central banks could rein in long term rates simply by holding down the short end of the curve, then Greece would not be currently paying such a high price for its debt:
http://static.seekingalpha.com/uploads/2010/8/20/…
Long-term rates are a function of 2 things: inflation expectations and default risk. As the above chart shows, under the right conditions these forces will dominate anything the central bank tries.
As anyone who's been paying attention knows, the only reason Canadian mortgage rates are so low is because banks have an ironclad default guarantee in the form of CMHC insurance. Yes, the BOC rate is low, but at these absurd RE valuations, default risk is extremely high, and the banks know this full well.
As soon as these overpriced mortgages start to default in record numbers and the Canadian public wakes up to the fact that it's on the hook to the tune of billions of dollars, there will be a huge political push to remove this perverse "insurance". And once that happens, mortgage rates will rise to match the REAL risk, no matter what the BOC does with the short-term rate.
December 9th, 2010 at 10:23 am
No disrespect Dave, but are you on crack? I didn't make any such statements.
December 9th, 2010 at 10:05 am
@Renting:
Your argument contradicts itself. You start by saying bonds rates are going up (i.e. lower demand), but justify a high spread by saying banks will pile money into long bonds (i.e. high demand). The curve flattens in your situation.
Don't believe what I am saying. Just look at history.
Yes, inflation matters. That's what central banks are currently targeting by changing overnight rates. In Canada, that's the only thing the BOC targets.
December 9th, 2010 at 9:58 am
Dave both are tied to inflation just different people pulling the levers. However, keep in mind when bonds rise short rates will also be forced to rise otherwise the banks would just buy bonds with the cheap money. If the BOC will give the bank money at 1% and the bank can either lend it to you for a mortgage at 2% or buy a bond for 4% what do you think they will do? The BOC will be forced to raise the short rates otherwise the banks will just buy bonds and credit dries up.
December 9th, 2010 at 9:51 am
BG has made a lot of money and could likely afford to pay cash for both. He obviously isn't as bullish on RE as his commentary indicates.