Toronto Media Can’t Wait For The Market To Cool!

We know that negativity sells.

Death, destruction, chaos – they lead the nightly news.  Nobody wants to see an old lady reunited with her long, lost cat.

And as has been the case for the last decade, the Toronto media keep predicting doom and gloom for the real estate market, and just can’t wait for the market to cool!

They can’t wait.  So, instead, they just make stuff up…

MarketDropping

Headlines are a funny thing.

They’re big, bright, bold, and their purpose is catch the eye of the reader, both those readers who are interested, and often moreso – those that just offer a passing glance.

The right headline can turn a head, force a furrow of the brow, and maybe, just maybe, motivate somebody to pick up a copy of the paper.

So is it fair to say that the headline is almost more important than the content of the story?

I think so.

A client of mine sent me a story last Friday, one called, “Toronto Housing Market Shows Signs Of Cooling” from the Toronto Star.

My client asked me, “Is this true?”

I asked her, “Did you read the story?”

She offered an “LOL” and admitted, “No.”

It was a headline she saw on Facebook, and immediately sent it to me, without reading it.

And that proves what I often think about headlines – that they offer a one-line summary of the article, and sometimes, the article doesn’t even prove the headline itself to be correct.

This article – the one suggesting that the “Toronto housing market shows signs of cooling,” offers content to show, in fact, that the market is still red hot.

Because what is the definition of a cooling market?

We can use a number of different statistics or metrics.  Or we could use anecdotes.

We could probably make an argument that the market is hot, or cold, depending on what we want it to be.

And I find the headline, “Toronto Housing Market Shows Signs Of Cooling” to be irresponsible, as the author simply chose one metric, that means little, and used that to draw a conclusion.

How about this…

How about I tell you, “The real estate market cooled in December.”

But what if both the number of homes, and the price of those homes, were UP in December over November?

And what if I then told you, “Well, it was 3-degrees in December, and 10-degrees in November, as it got a lot cooler.  So real estate – all those houses, got cooler.  And thus the market cooled.”

Silly, and childish.  I know.

But my point is that you can basically back up an assertion or statement with something, if you so choose.

Now back to the Toronto Star article, that claims the “market is cooling.”

Here are some snippets from the article:

The number of homes sold in Canada last month hit a record as supply tightened, particularly in the Toronto area, where a fiercely competitive market is dissuading some homeowners from putting their properties up for sale, the Canadian Real Estate Association said Monday.

There were 57,669 homes sold nationwide over the Multiple Listing Service in April, a 10.3 per cent increase from the same month last year, the industry organization said.

The rise in sales came as the number of new homes put up for sale slipped 3.7 per cent from a year ago to 103,028.

That trend was even more pronounced in the Toronto area, where new listings were down 10.3 per cent compared to April 2015.

Okay, so show me where the market is cooling in those four paragraphs that open the article.

The number of homes sold reached a “record.”

The number of homes sold in April was up 10.3%.

But new listings in Toronto were down 10.3%.

Then the article gives us this:

Still, CREA says sales in April were up year-over-year in about 70 per cent of all local markets compared with a year ago, boosted by B.C. and the Toronto region.

Compared with March, sales were up 3.1 per cent in April, while new listings declined 0.2 per cent.

Month-to-month figures for Vancouver and Toronto suggest the two frothy markets may be starting to cool, CREA president Cliff Iverson said.

How is that “cooling?”

Sales are up 70%.  That’s not a small number!

Prices are up, as we know, without them even telling us.

And new listings are down 0.2%.  Well, gee whiz, 0.2%.

The idea that the market is “cooling” when sales are up, and prices are up, is insane.

And they used Cliff Iverson to suggest that the market is cooling, but didn’t use a quote from him!  What did he say?  How did he say it?  How did he “suggest the two frothy markets may be starting to cool?”  Why didn’t the Toronto Star follow up on this statement?

Then they quote an economist who draws a crazy conclusion:

“Activity was down or flat in both for the second consecutive month, suggesting that a soft-landing may be in store for these red-hot markets,” Petramala said in a note.

A soft landing…..because sales are down?

But prices are still up?

Then we get this end to the story:

The national average price for homes sold in April rose 13.1 per cent from a year ago to $508,097.

Excluding the greater Vancouver and greater Toronto markets, the average price was $369,222, up 8.7 per cent from April 2015.

So home prices are up 13.1%.

But the market is cooling.

Honestly, folks, I think the Toronto Star just wanted to put something out there that would catch eyes.  They wanted a headline that used the words “Toronto real estate” and “cooling” together, and so they used that headline, then wrote a story, that proved the opposite.

Prices are up.

Sales are up.

Inventory is down, and that might be a reason why prices are up!

The article also mentioned that many sellers aren’t listing their homes for sale, as they don’t know where they’ll move to, or they can’t find a house to buy.

Great.  I agree.

And that is yet another reason why prices will go up; because supply is down.

Read this article a second time, and then a third.

Show me how “the market is showing signs of cooling.”

In my childish example above, I told you I could make an argument that the “market has cooled” in December, because it was colder outside in December than it was in November.

Well the Toronto Star article has selectively chosen a couple of months where the supply of properties dropped, and used this to suggest that the “market is showing signs of cooling.”

Nevermind that sales are up.

Nevermind that prices, which is the be-all and end-all of indicators as to whether the market is “hot” or “cold,” are up.

To justify the headline, “Toronto Housing Market Shows Signs Of Cooling,” the Star used three things:

1) CREA President, Cliff Iverson.  Even though they didn’t use a quote from him, but rather indicated he “suggested” something about the market cooling, all very vague.

FAIL.

2) TD economist Diana Petramala, who said that activity – in Vancouver, which is one city in Canada, was down or flat for a whopping two months in a row, which means somehow that there is a “soft landing” ahead.

FAIL.

3) They included multiple statistics showing that house prices across Canada are up, and that sales numbers through Canada are up, and that nothing has really “cooled.”

FAIL.

What a wacky article.

It’s as though every media member wants to be the first to “break” the story that the market is cooling, so bad in fact, that now they’re just making stuff up.

That headline was so incredibly misleading.

But how many people read the headline, and didn’t read the story itself?

9 Comments

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  1. Doug W says:

    You read The Star ? My father told me many , many years ago ” do not believe anything that the Star prints , they never fact check ” wise man my father .

    1. Frank says:

      Not to impugn your dad’s opinions, but did he read any Toronto newspaper? If so, I assume it was either The Sun or The (National) Post, since he doesn’t sound like the G&M type. And the former two aren’t/weren’t exactly known for their objective journalism.

      Perhaps he isn’t/wasn’t a Torontonian, in which case his antipathy to anything emanating from the Big Smoke is understandable (not to say tiresomely predictable).

  2. Michael O'Brien says:

    Well crafted column!

  3. Joe Q. says:

    My understanding is that headlines are usually written by someone other than the author of the article (and that this is fairly standard in the newspaper industry).

  4. Ralph Cramdown says:

    This is just a rewrite of the CREA press release, which contains the Iverson quotation:

    “National home sales set new monthly records over the past two months, even as activity in Greater Vancouver and the GTA appears to have topped out,” said CREA President Cliff Iverson.

    http://www.crea.ca/news/canadian-home-sales-set-record-in-april/

    1. Long Time Realtor says:

      With all due respect to Mr. Iverson, the real estate market “tops-out” (most transactions & highest average price), in either April, May or June every year.

      However, the notion that prices have topped out on a monthly basis in relation to last year’s numbers is ludicrous. As we can readily surmise from TREB’s latest mid-month numbers for May. An excerpt of which is below.

      “May 18, 2016 – Greater Toronto Area REALTORS® reported 6,010 sales through TREB’s MLS® System during the first 14 days of May 2016. This result represented a 7.1 per cent increase compared to 5,610 sales reported for May 2015.”

      “The average selling price for the first two weeks of May 2016 was $758,626, which represented a year over-year increase of 16.1 per cent compared to an average price of $653,274 reported for the same time period in 2015. Double-digit annual rates of average price growth were experienced for all major home types.”

  5. Appraiser says:

    Record number of transactions, record prices and lowest number of days on market before selling are clear signs of a cooling market.

    Everyone knows that.

    1. @ Appraiser

      “A sarcasm detector, well that’s a g-rrreat idea!”

    2. Kyle says:

      Look on the bright side, at least they didn’t try to support the “market cooling” with yet another garbage quote from one of those completely and utterly useless “experts” like Madani, Rabidoux, Macbeth or Barnabic. If i’m subjected to one more article that quotes one of those clowns i think i’m going to barf.

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