Comments on: Why use biased house-price indexes? http://blog.canadianbusiness.com/why-use-biased-house-price-indexes/ Fri, 20 Nov 2009 07:52:10 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Todd http://blog.canadianbusiness.com/why-use-biased-house-price-indexes/comment-page-1/#comment-39990 Todd Tue, 08 Sep 2009 16:31:49 +0000 http://blog.canadianbusiness.com/?p=2795#comment-39990 Being a real estate appraiser the CREA's use of the average house price has long been a big pet peeve of mine. The average house price is a horrible measurement of the housing market as it does not account for shifts in market preferences (such as less condo living or increased sales of executive homes). I must constantly educate my clients on the flaws in this unit of measurement as many expect that if the Average house price went up by 10% so did their home. CREA must stop this smoke and mirrors technique and start using more reliable measures similar to the U.S., which has a price index. While no measure of the housing market will be perfect most will be radically superior to the average house price. Being a real estate appraiser the CREA’s use of the average house price has long been a big pet peeve of mine. The average house price is a horrible measurement of the housing market as it does not account for shifts in market preferences (such as less condo living or increased sales of executive homes).

I must constantly educate my clients on the flaws in this unit of measurement as many expect that if the Average house price went up by 10% so did their home.

CREA must stop this smoke and mirrors technique and start using more reliable measures similar to the U.S., which has a price index. While no measure of the housing market will be perfect most will be radically superior to the average house price.

]]> By: Larry MacDonald http://blog.canadianbusiness.com/why-use-biased-house-price-indexes/comment-page-1/#comment-27250 Larry MacDonald Fri, 19 Jun 2009 15:32:59 +0000 http://blog.canadianbusiness.com/?p=2795#comment-27250 MJ I am of course just speculating about why CREA continues to use a flawed indicator. It's entirely possible there are no ulterior motives on the part of CREA. It may simply be a case of not knowing better alternatives exist or it could be a "turf" thing (i.e. reluctance to switch to a measure calculated by another source) MJ
I am of course just speculating about why CREA continues to use a flawed indicator. It’s entirely possible there are no ulterior motives on the part of CREA. It may simply be a case of not knowing better alternatives exist or it could be a “turf” thing (i.e. reluctance to switch to a measure calculated by another source)

]]> By: Michael James http://blog.canadianbusiness.com/why-use-biased-house-price-indexes/comment-page-1/#comment-27246 Michael James Fri, 19 Jun 2009 14:13:15 +0000 http://blog.canadianbusiness.com/?p=2795#comment-27246 I think you're on the right track looking for financial motives for the actions of organizations. Probably closer to the mark is that things continue to be done as they have "always" been done due to momentum, and a change to a better system is resisted for the reasons you give. I think you’re on the right track looking for financial motives for the actions of organizations. Probably closer to the mark is that things continue to be done as they have “always” been done due to momentum, and a change to a better system is resisted for the reasons you give.

]]> By: This and That: Father’s Day Edition | Canadian Capitalist http://blog.canadianbusiness.com/why-use-biased-house-price-indexes/comment-page-1/#comment-27244 This and That: Father’s Day Edition | Canadian Capitalist Fri, 19 Jun 2009 14:00:21 +0000 http://blog.canadianbusiness.com/?p=2795#comment-27244 [...] Larry MacDonald wonders why the Canadian Real Estate Association (CREA) continues to use a flawed house price index. [...] [...] Larry MacDonald wonders why the Canadian Real Estate Association (CREA) continues to use a flawed house price index. [...]

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