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Real-estate board, RBC data for Montreal resales don't line up

Real-estate board, RBC data for Montreal resales don't line up

Montreal area resales rose for the ninth consecutive month in February, the city&#8217;s real estate board said Wednesday.

Montreal area resales rose for the ninth consecutive month in February, the city’s real estate board said Wednesday.

Photograph by: Marcos Townsend, Gazette file photo

MONTREAL - You can’t blame a Montreal homeowner for being puzzled by some of the contradictory real-estate trends the media were reporting Wednesday morning.

According to an RBC report, the Montreal-area housing market had “shown signs of softening” during the last three months of 2011, with resales dropping 2.4 per cent.

Yet only hours later, headlines blared that Montreal-area resales were up nine per cent in February, year over year, for the ninth consecutive monthly increase.

In fact, the Greater Montreal Real Estate Board said resales had actually accelerated at the end of last year, rising 6.9 per cent between the third and fourth quarters.

The contrasting depictions of Montreal’s real estate market – eventually traced to an error in the way RBC had seasonally adjusted its numbers – was later resolved with a mea culpa from the bank and an important revision: Montreal’s apparently “softening” real-estate market was now one that had maintained “strong momentum.”

While this particular case may be one of human error, examples of contrasting headlines based on monthly housing starts, building permits, resale reports from real-estate boards and major brokerages, plus market outlooks can baffle average homeowners and investors, observers say.

As a real estate reporter, I cringe at the beginning of each month in preparation for the predictable onslaught of reports and the inevitable challenge of explaining to readers why one 25-per-cent drop in housing starts doesn’t mean the market is going to tank.

“You have to be really careful,” said John Andrew, a real-estate professor at Queen’s University and director of the Queen’s Real Estate Roundtable. “We can see really dramatic shifts.”

He pointed to the value of building permits, which declined nationally by 12.3 per cent in January – significantly more than what economists were expecting – after a 10.5-per-cent increase in December.

“The decrease was largely the result of lower construction intentions for multi-family dwellings in Ontario,” Statistics Canada said.

Andrew cautioned investors into reading too closely into permits.

Just like many of the announcements Montrealers have heard for residential towers and hotels, these permits don’t necessarily translate into groundbreakings.

“It’s so early in the process and so many of those permits never get acted on,” he said.

Even housing starts, which indicate that a project is going ahead, can be misleading when they are viewed on a monthly basis.

A developer’s decision to break ground on a 1,000-unit project in May instead of June can skew regional figures dramatically.

“I don’t worry about them on a month-to-month basis,” Andrew said.

For 2012, most economists are calling for Canada’s housing market to cool over the next 24 months.

“We expect sales and prices will be relatively flat in the year ahead,” said Adrienne Warren, Scotiabank Senior Economist on Wednesday.

“This cooling-off period is an important step in helping to rebalance housing valuations, allowing fundamentals such as income to catch up to prices.”

Nationally, average home prices rose 4.3 per cent in 2011, but cooled considerably in the final quarter, rising just 1.1 per cent from the previous year, according to data compiled by the Canadian Real Estate Association.

In February, the median price of a single-family home in the Montreal Area rose five per cent to $266,000.

But that’s just one month, and the Greater Montreal Real Estate Board also expects prices to appreciate more softly overall in 2012.

Andrew said he’s waiting to see a few more months of cooling prices nationally before he’ll believe it’s a trend.

“Until I see that for a couple of more months I’m not going to believe it.”

Postmedia News contributed to this report