Had actually written another entry for today, but came across this article from Macleans, and decided to do a write up on it instead.
I highly recommend everyone take the time to read it in full, as it is a very interesting piece and gives some great insights on the inner workings of all these forecasts coming from the various real estate outlets.
I guess what struck me is that this is the first real main stream article to really take the real estate industry to task for their so called “forecasts” and statistics, and in many cases just flat out calls them out.
It is really quite damning that the leading economist that they spoke to would only give his honest assessment on the condition of anonymity.
“There’s clearly a lot of spin,” he says. Even the CMHC, which promotes home ownership and depends on home sales to sell mortgage insurance, has an interest in seeing the market prosper. “There is quite a lot of uncertainty regarding the market in general right now, and there are too few uninterested parties who are giving any sort of reasonable analysis on that outlook.”
It pretty much tells you everything you need to know about the integrity of these forecasts when the sales pitch takes priority over silly little things like accuracy. The ‘economists’ these outlets trot out are little more then paid mouthpieces, merely using their degrees in a thinly veiled attempt to lend credibility to bogus forecasts.
It’s basically shill or gtfo, and even if you shill there is no guarantee you don’t end up like David Lereah. Robert Shiller summed up their motivations nicely in this passage;
“The predictions from those guys are very biased,” he says. “They know that in a declining market, the volume of sales falls dramatically and real estate agents lose their jobs. So they don’t want to say anything that could be seen as contributing to a falling market. If their economist predicted a decline in the market—and then it happens—that’s deadly. The guy would have to watch out for his life.”
It’s scary that people are making decisions involving their long-term financial health when practically all the sources have a common vested interest… and for the most part these ‘forecasts’ and ‘industry experts’ go unquestioned by the media because they are dependent on the industry for their advertising dollars.
In any case, it’s nice to see these kind of stories are starting to get out there, and in the coming months I imagine we’ll be seeing many more as prices continue to decline. I recommend all of you take the time to read the entire thing, it’s really an excellent article.