Are they just making this stuff up?

Is CREA just making this stuff up? Earlier in the year, they projected existing home sales to drop by only 1.6%. After some horrible March data, I mentioned that their numbers were fantasy.

Well, it appears that they agree. Today they chopped their numbers down big time.

From the CREA website:

National home sales are forecast to ease 11.5 per cent to 460,900 units in 2008,
and to ease a further four per cent the following year.

They increased their estimate of the sales drop from 1.6% to 11.5%. I think that when it is all said and done, 11.5% will seem low (there was a 13% drop in Q1 alone). But, OK, fine.

What about price? They had previously projected a price increase of 5.5%.

CREA says:
The MLS® residential average price is forecast to rise 5.3 per cent in 2008 and a
further 4.2 per cent next year, pushing prices to new heights.

So they did a decent cut to their sales numbers but barely touched the average price forecast! There will be approximately 50K less homes sold this year and perhaps 50K of extra inventory (than they forecasted just 3 months ago). They think that losing those 50K transactions will have no impact on selling prices and that home prices will still increase by a magical 5%. I see....

Since the average price increased by just 4% in March, they are basically saying that the huge slowdown in the housing market this winter will magically stabilize here. Even if you allow for the possibility that the February and March numbers were snow related, you would need to get a decent April number (ie 5%ish) to justify 5% for the full year. Since it is May 6th, I would imagine that CREA already has a reasonably accurate preliminary figure for April. Therefore, I would not be surprised to see a decent April number. This would do little to change the chain of events that I listed last month.