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- May 2, 2008
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How do they calculate changes in home prices?
RICHARD BLACKWELL
January 13, 2009
Why do some statistics show house prices dropping sharply, while others show prices up?
The problem with home price statistics is that there are an infinite number of ways to calculate and compare them.
New Statistics Canada numbers released yesterday, for example, give an idea of what`s happening with newly-built homes (but not the resale of older homes). They show a 0.3-per-cent decrease in new-home prices in November, 2008, compared with the previous month, but a 0.7-per-cent increase compared with November of 2007.
That`s only the national average, however. In different markets there are wildly different numbers. In St. John`s, prices were up year over year by more than 25 per cent, while in Edmonton they were down almost 8 per cent.
Print Edition - Section Front
Section B Front Enlarge Image
The Globe and Mail
Is Statistics Canada the only group that compiles house price data?
No, and that`s another issue. Various organizations such as the Canadian Real Estate Association (CREA) and real estate brokerage Royal LePage also collect and publish regular sales numbers, and these don`t always agree.
Royal LePage often categorizes houses into different groups, such as detached bungalows or detached two-storey homes, so that adds another whole set of permutations. At the moment it is projecting a 3-per-cent drop in prices (nationally, on average) for 2009.
CREA`s numbers reflect all houses sold on the Multiple Listing Service (MLS), but again there are many ways to compare them. CREA`s most recent numbers, for example, show a 10-per-cent drop in average prices across the country between the month of November, 2007, and the same month in 2008. But its year-to-date numbers (which compare prices over 11 months in 2007 with 11 months of 2008), show only a 3.5-per-cent drop.
Are there any other important housing statistics?
Statscan also releases building permit numbers, while Canada Mortgage and Housing Corp. issues statistics on housing starts. Both of these give some idea of the health of the housing market.
If the assets in asset-backed commercial paper (ABCP) exist, why don`t the holders just cash them in? Many of the assets that back ABCP are mortgages and derivatives.
Those assets were chosen because they provide a continuous stream of income, which in turn flows through to the ABCP investors.
When the ABCP market froze, there was no point in selling off the property backing the mortgages or the assets backing the derivatives, as this would have locked in huge losses.
Making that move would have been analogous to selling off an income property that has lost value, even though it is still generating a good rental income.
There`s a further complication: Owners of ABCP don`t have first claim on most of the assets underlying the paper. A group of foreign banks that provided loans to buy many of the assets have first dibs, so in any liquidation owners of the paper would be left with almost nothing.
That`s why a group of the biggest ABCP investors, including National Bank of Canada and the Caisse de dépôt et placement du Québec, pushed for the creation of the Montreal Accord in August, 2007, to stop the liquidation of the assets and buy time to find another solution.Why do some stock prices on the TSX seem to change after the 4 p.m. (EST) close?
Finishing up trading at the end of the day isn`t as straightforward as it used to be, when the closing price of a stock was simply the last trade made before the markets shut down for the day.
In 2004 the TSX introduced a system called "market on close," which allows traders to place orders during the day that will be filled at the final closing price.
As part of this system, there are sometimes price adjustments that are not disclosed until 4:10 p.m., in order to balance the orders.
Do those changes affect all stocks on the TSX?
Only the stocks in the S&P/TSX composite index, the global gold index and the global mining index are subject to market-on-close or the 4:10 p.m. price recalculation. But that can mean that you won`t get a final price on a stock - or on the composite`s closing - until it is all over with. Also, many stock reporting websites have a 15-minute delay, so you might not see the final price until around 4:30 p.m.
RICHARD BLACKWELL
January 13, 2009
Why do some statistics show house prices dropping sharply, while others show prices up?
The problem with home price statistics is that there are an infinite number of ways to calculate and compare them.
New Statistics Canada numbers released yesterday, for example, give an idea of what`s happening with newly-built homes (but not the resale of older homes). They show a 0.3-per-cent decrease in new-home prices in November, 2008, compared with the previous month, but a 0.7-per-cent increase compared with November of 2007.
That`s only the national average, however. In different markets there are wildly different numbers. In St. John`s, prices were up year over year by more than 25 per cent, while in Edmonton they were down almost 8 per cent.
Print Edition - Section Front
Section B Front Enlarge Image
The Globe and Mail
Is Statistics Canada the only group that compiles house price data?
No, and that`s another issue. Various organizations such as the Canadian Real Estate Association (CREA) and real estate brokerage Royal LePage also collect and publish regular sales numbers, and these don`t always agree.
Royal LePage often categorizes houses into different groups, such as detached bungalows or detached two-storey homes, so that adds another whole set of permutations. At the moment it is projecting a 3-per-cent drop in prices (nationally, on average) for 2009.
CREA`s numbers reflect all houses sold on the Multiple Listing Service (MLS), but again there are many ways to compare them. CREA`s most recent numbers, for example, show a 10-per-cent drop in average prices across the country between the month of November, 2007, and the same month in 2008. But its year-to-date numbers (which compare prices over 11 months in 2007 with 11 months of 2008), show only a 3.5-per-cent drop.
Are there any other important housing statistics?
Statscan also releases building permit numbers, while Canada Mortgage and Housing Corp. issues statistics on housing starts. Both of these give some idea of the health of the housing market.
If the assets in asset-backed commercial paper (ABCP) exist, why don`t the holders just cash them in? Many of the assets that back ABCP are mortgages and derivatives.
Those assets were chosen because they provide a continuous stream of income, which in turn flows through to the ABCP investors.
When the ABCP market froze, there was no point in selling off the property backing the mortgages or the assets backing the derivatives, as this would have locked in huge losses.
Making that move would have been analogous to selling off an income property that has lost value, even though it is still generating a good rental income.
There`s a further complication: Owners of ABCP don`t have first claim on most of the assets underlying the paper. A group of foreign banks that provided loans to buy many of the assets have first dibs, so in any liquidation owners of the paper would be left with almost nothing.
That`s why a group of the biggest ABCP investors, including National Bank of Canada and the Caisse de dépôt et placement du Québec, pushed for the creation of the Montreal Accord in August, 2007, to stop the liquidation of the assets and buy time to find another solution.Why do some stock prices on the TSX seem to change after the 4 p.m. (EST) close?
Finishing up trading at the end of the day isn`t as straightforward as it used to be, when the closing price of a stock was simply the last trade made before the markets shut down for the day.
In 2004 the TSX introduced a system called "market on close," which allows traders to place orders during the day that will be filled at the final closing price.
As part of this system, there are sometimes price adjustments that are not disclosed until 4:10 p.m., in order to balance the orders.
Do those changes affect all stocks on the TSX?
Only the stocks in the S&P/TSX composite index, the global gold index and the global mining index are subject to market-on-close or the 4:10 p.m. price recalculation. But that can mean that you won`t get a final price on a stock - or on the composite`s closing - until it is all over with. Also, many stock reporting websites have a 15-minute delay, so you might not see the final price until around 4:30 p.m.
