“The only function of economic forecasting is to make astrology look respectable.” Noted economist, John Kenneth Galbraith
The Parable:
A mathematician, an accountant and an economist apply for the same job. The interviewer calls in the mathematician and asks “What does two plus two equal?” The mathematician replies “Exactly four.”
Then the interviewer calls in the accountant and asks the same question “What does two plus two equal?” The accountant says “On average, four – give or take ten percent.”
Finally the interviewer calls in the economist and poses the same question. The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, “What do you want it to equal”?
The humour in the parable, which was undoubtedly written by an economist, illustrates the nature of economics and numbers. Just consider that economists and other financial observers have been speculating for years about Vancouver’s housing bubble and impending burst. Yet, it hasn’t happened. In fact, in spite of an occasional dip in sales, home prices have risen, not dropped. For years we’ve also heard dire warnings about Canadian interest rates going up to a level that would place mortgage holders in peril. That hasn’t happened either—though it doesn’t mean these events won’t occur at some point.
The truth behind the numbers is that economists are not unlike political scientists in that they don’t all share the same perspectives and principles. Some base their projections on theories, some on data, and some on historical trends. And though their forecasts can influence the economy to some degree, they can’t always accurately predict the outcomes.
There is also a wide spectrum of self-appointed experts who talk, broadcast and write about economics and financial markets. Not all possess a formal education in these areas — many are people who take an interest in the topics and simply share their opinions based on what they read, their personal experience, political bent, and who they talk to — including people who may know as much or as little as they do.
All of this is not to say we should ignore the pundits. Knowing what economists are saying is important — firstly because what they say can influence the economy itself, and by extension your decisions, and those of your clients. And secondly, although no one has a crystal ball, there are a great many economists who have proven they possess the skill, the knowledge, and the foresight, to be highly informative, and quite accurate. The key is to be a critical consumer of economic information and expose yourself to more than one viewpoint.
Real estate is a market sector widely covered by a cross-section of media that push out articles, blogs, reports and tweets, hour by hour, day by day. Several well-established newspapers and magazines as well as trade publications and online blogs cover financial and economic topics that are useful to Realtors. Turning to more than one of these information channels will more likely give you a broader picture than relying on a single source.
One of the best places to turn for solid real estate industry numbers is the Fraser Valley Real Estate Board’s own Statistics resources. Not only does the Board compile and analyze sales and market data each month, members have access to a unique online resource called the Stats Centre — a housing market research tool designed specifically for ease of use, fast analysis and simple sharing. With Stats Centre you can:
- compare up to four geographies at a time
- filter search results by countless housing variable combinations
- examine housing market metrics as counts, medians, and averages
- customize price and square foot ranges
- use it on your mobile device
- share search results online, in print, via email and live data widgets
Another relevant source of information is the BC Real Estate Association with chief economist Cameron Muir and economist Brendon Ogmundson providing solid data and forecasts that are highly regarded province-wide. BCREA publishes monthly provincial statistics, monthly podcast videos and quarterly housing and mortgage rate forecasts which are all available on their website.
With all the information streaming out from print, electronic media and internet sites, there is ample opportunity for you to have impressive data at the tip of your fingers when working with clients.
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