The fraud

Five years ago this pathetic blog prattled on about the Frankenumbers realtors were churning out. Monthly, for example, the Toronto cartel would quietly revise old stats to eliminate deals that didn’t close, without public disclosure. Realtors would double or triple-list a home (ie. on multiple boards) and sales stats would plump as a result. Published selling prices would sometimes be greater than the actual amount, thanks to agent misreporting. And FSBO (sale by owner) listings materialized in the summer of 2013, padding the numbers.

Of course, we also got the infamous HPI – Home Price Index abomination – designed to smooth out monthly fluctuations, masking market momentum. Meanwhile monthly reports have routinely been designed to give a false impression of current conditions. Like this one from a few days ago:

TREB President Garry Bhaura announced that Greater Toronto Area REALTORS® reported 4,009 home sales through TREB’s MLS® in January 2019 – up by 0.6 per cent compared to January 2018. On a preliminary seasonally adjusted basis, sales were up by 3.4 per cent compared to December 2018.

“It is encouraging to see the slight increase in January transactions on a year-over-year basis, even with the inclement weather experienced in the GTA region during the last week of the month. The fact that the number of transactions edged upwards is in line with TREB’s forecast for higher sales in calendar year 2019,” said Mr. Bhaura.

The MLS® HPI Composite Benchmark price was up by 2.7 per cent compared to January 2018. The condominium apartment market segment continued to lead the way in terms of price growth. The average selling price was up by 1.7 per cent on a year-over-year basis.

But here’s the reality. As reported here ten days ago, the current average detached 416 price of $1.174 million is 13.3% lower than it was exactly 12 months ago. Someone needing to sell would have a loss of more than $180,000 plus $47,138 in land transfer tax and another $58,700 in commission. The total hit = $285,800, or 21%. The average detached house in the heart of the GTA is changing hands for 12% less than in the Spring of last year and a 25.6% below what it commanded the previous year.

 There may be more truthiness in a North Korean state TV broadcast than a Toronto Real Estate media release. Despite the fact Canadians have shoveled more money into residential real estate than any other asset, realtors routinely fudge, fabricate and lie. If they were selling a few hundred dollars’ worth ETFs or stocks instead of million-dollar properties, they’d be flamed, fined or barred.

Some boards have fessed up to their sad ways. For example, the one in Hamilton  published a mea culpa media release that begins: “The REALTORS® Association of Hamilton-Burlington has revised the 2018 year-end market data and reports. Inconsistencies were found within the 2017 data related to listings posted on multiple MLS® systems. These “double listings” resulted in the sales and listings figures being higher than what actually took place in 2017.”

One reason this admission happened was local disturber and former badboy realtor Ross Kay, who’s made exposing crap data his life’s work. Kay argues the industry’s deliberate attempts to inflate sales figures for the last five years materially gassed the housing bubble, led scores of people to buy in haste and pay too much, while polluting the very stats that are used by industry, analysts and governments to set housing policy.

This week, he adds, it happened again as CREA published national numbers for January. “Over 3.5 million families traded homes since May of 2013,” Kay says. “They made those trades using bad data and bad market intelligence. These inflated monthly sales stats are in effect a primary reason why Canada’s housing bubble had inflated as big as it had since 2013.”

“This means every housing chart in Canada posted by a bank, a ratings agency, an economist, a government or a realtor-blogger looking for attention was a lie.  The sales volumes governments relied upon to calculate their budgets were wrong.  The LTVs produced in bank quarterly reports were false.  The false narrative of the impact of B20 (stress test) is now debunked in that the national market turned in 2015 not 2018.”

And Kay adds this illuminating fact: “We are now into the 6th reporting week of 2019 and I can guarantee nationally home buyers have purchased fewer home each week as they did throughout all 52 weeks in 2018.”

Well, Mr. Kay’s voice is one the cartel would rather not hear. And yet the official admission of counting sales multiple times, plus the yawning divide between street prices and realtor stats gives him a growing cred. Dishonesty in data collection and dissemination is a big deal when the industry reports on itself. How many families were infected by realtor-induced FOMO, buying too fast or paying too much? How many sellers have kept prices high, based on a false narrative of the market? Are the regulators blind, or just incompetent? And how about the media outlets who print realtor states, word-for-word, as news?

There’s a special place in hell for those who trick and lead stray anyone who trusts. It will be a crowded house.