How well do banks forecast?

They may get paid big bucks, but their forecasting in the last 5 years has missed the mark many times in regards to the housing market.  ( Yeah, I know that I cherry picked the reports, but its my blog)

Bubble Watch from 2005

"Cooling housing market shows no signs of bubbly behavior"

This was right before the bidding wars and the lift off of housing prices the market was NOT cooling.

Housing Bubble Watch Aug 2006

However, there is good reason to believe that the market (Saskatoon) may open up in the months ahead, as housing starts are currently running about 34% higher than a year ago. With houses remaining reasonably affordable, the market should become more balanced and price growth should slow before long.  

Hmmm, Saskatoon experienced 53% house price growth right after this report from Oct 06 to Oct 07, that was not slower price growth.  The year after, house price growth was over 30% year over year.

From Long Term Outlook for Home Prices Sept 2006

"Saskatoon will experience below average house price growth (2-3% per year) from 2007-2030." 

At 2% per year, the average house price would hit 253K by 2030 ( using the average price of 160k from 2006).  At 3%, the average house price would hit 318k by 2030.  At 2011, the average price has hit about 300k.  At first glance, it would appear they have clearly missed the mark with this one. But once the bubble bursts, there will be a long term drag on house prices.  So 318k by 2030 is still possible.

"Saskatchewan will experience negative population growth from 2007-2030."  

4 years later most reports say that Saskatchewan will be near the top in population growth.  But a lot can happen in 20 years, so don't count them out with this one yet.



This is from April 2009, Overpriced and Overbuilt about the forecast of 2009.

TD economists expect the average Canadian house price to fall to about $246,000 in 2009, down 24% from the peak of $324,000 in 2007.

 Average house price in 2009 ended up at $320,000

From Canadian Housing Landing Safely written Dec 2010 for the forecast for 2011 and 2012

Average house prices will drop less than 1% in 2011 to 335k and may fall 1-2% in 2012 to 331k

Are we to expect their forecast for 2011 and 2012 to be right when past experience clearly shows they have been wrong many times.  I will not be right all the time either but I don't get paid like them and if you would have placed some bets on their forecasts, you would have lost big time.  Don't believe everything I say and don't believe everything the banks, realtors and the MSM say either.  Educate yourself and make your own decision.  Then you can take the credit or blame yourself with what ever happens.