Tuesday, November 18, 2008

CREA

Interesting comment re CREA:

I'm not sure what you expect them to do. Obviously, they have a self-interest in stemming the panic and helping to stabilize housing prices.If people expect housing prices to go down, then they will, because no one is going to buy when they expect the price to drop 10-20% of their purchase price in the first year.You can't really blame them for trying to inject a little confidence into the market so that we don't end up in a real estate freefall. They can't exactly sound the alarm and send everyone panicking.Of course, just because their position is understandable, doesn't mean you should put any credibility in their predictions. But then again, you should never listen to the advice of someone with a vested interest in the outcome.
What I expect CREA to do is to report the numbers. Then, if they have to spin, at least spin in a way that is not complete make believe. Their "inject a little confidence" is fantasy and I suspect that they know it, too.

Example: If houses are down 10%: State that they are down 10%. Give the reasons that they think that they are down 10%. Don't make up stuff about the weather. If things are expected to get worse, then just don't say anything about the future. You lose credibility when you keep on spinning this as if the bottom is here and things will get better soon. All that spinning by the US equivalent of CREA in 2006 and 2007 did nothing for them. Prices still went lower because people were overleveraged. By making up this fantasy that Canada is somehow superior to the rest of the world, and things will magically stabilize here, they are losing credibility. CREA is free to make up its fantasy, and people like me should be free to criticize them. I just hope that no one is using their fantasy to make decisions as important as buying a house.

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