CREA’s Ongoing Backcasts – Predicting What Will Happen Last Month

From the G&M 15 Mar 2011“Gains in house prices are likely to “recede” starting next month as shorter mortgage terms keep some buyers out of an already softening market, the Canadian Real Estate Association said Tuesday.”
“When you take Vancouver out of the equation, the year-over-year increase in the national average price drops to 3.4 per cent,” said Gregory Klump, the association’s chief economist. “While that’s still stronger than in the past six months or so, national average price gains may recede after tighter mortgage regulations take effect in March.”

Alex at VREAA 15 Mar 2011 pointed to the CREA prediction above and asked “Didn’t they just finish telling us prices would RISE throughout 2011?”

Yes, they did, in this CREA press release at, 8 Feb 2011 – excerpts:
“The Canadian Real Estate Association (CREA) has revised its 2011 forecast for home sales activity via the MLS, and extended it to 2012.”
“The national average home price is forecast to rise 1.3 per cent in 2011 and 2012, to $343,300 and $347,900 respectively. Average price is expected to rise modestly in most provinces, reflecting the continuation of a healthy balance between supply of, and demand for, homes listed for sale.”

The two reports are not completely mathematically contradictory, but they are very different in spirit, going from optimistic to guarded based on very recent price action. We have discussed this phenomenon before. [CREA ‘Forecast’ Is Actually A ‘Backcast’ – “Plus 13.3%… No… Make that Plus 5.5%… Actually, scrap that… Let’s go with Minus 1.2%.. No, wait.. wait.. it’s coming to me..!” (VREAA 4 Aug 2010)] The CREA reports are commentaries of things past, and they have absolutely no predictive value whatsoever. What is frustrating is that they don’t simply admit it. -vreaa

One response to “CREA’s Ongoing Backcasts – Predicting What Will Happen Last Month

  1. They are saying that in 2011 prices will INCREASE by 3.4%. In 2010, prices increased by x% where x>3.4, so the price increase has dropped TO 3.4%.

    Mathematically, their statement is that house prices are still increasing, but their derivative is decreasing.

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