Monday, January 11, 2010

LePage predicts 7.2% increase in Metro house prices

Royal Lepage predicts Vancouver house prices will continue to increase in 2010

Vancouver's real estate market saw substantial year-over-year price increases for the final quarter of 2009, and prices are expected to increase 7.2 per cent in 2010, according to the latest Royal LePage Market Survey Forecast and House Price Survey.

So says the press release issued by LePage and reported in numerous media outlets and on many blogs. There were 44 links to the story on the first 5 pages on Google. Derrick Penner of the Vancouver Sun also reported on the LePage prognosis.

So what, you might ask.

When I read the story, the first thing that came to mind was what did LePage predict would happen last year. I re-read Penner's story but there was no mention of last year's prediction. All he wrote was that in 2009 Metro had experienced a double digit increase in house prices.

So I spent 30 seconds on-line and quickly found the answer. For 2009, LePage had predicted ....are you ready? a 9% DECLINE IN PRICES.

Now, I don't know about you, but I think that is something that Penner and other responsible journalists should have reported. Yes, LePage is a big company, with a recognizable logo, but they are not always right. I wrote to Penner and eventually got a response through Twitter...."yes LePage was wrong last year, but so were most people" Nonetheless, I have sent in the following letter to the editor of the Vancouver Sun.

I would caution Vancouver residents not to make any significant purchase or sale decisions based on the LePage prediction that Vancouver real estate prices will rise 7.2% in 2010. (Metro home prices heading up in 2010 firm predicts, January 8, 2010). What reporter Derrick Penner forgets to mention is that last year around the same time, LePage predicted that Vancouver area prices would drop 9% in 2009, when in fact there was a double digit increase by year end.

I will not pretend to know what will happen to Vancouver area prices in 2010, other than to predict that the change will not be a 7.2% increase. There are far too many variables for any of us to offer such a precise prediction. But I do encourage Sun reporters to take a few moments to check the accuracy of previous crystal ball gazing, when reporting on future predictions. It might give Sun readers a better perspective on their potential accuracy.

1 comment:

frank schliewinsky said...

i agree that the spurious accuracy makes one question the reliability of such a forecast, not to mention the use of real estate agents to arrive at the forecast in the first place. however, i think that you're too critical in dismissing their 2009 forecast. average prices did decline. probably more than predicted but what was unexpected was the fast rebound in prices after the mid year. maybe the biggest financial crises since the great depression was just another way of bankers scamming us all. all these crises, one after another, are starting to become tiresome.