Guelph is the best place to buy real estate

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According to Moneysense, and our Mayor, the best city in Canada to buy a home is Guelph.  While I agree that Guelph is a nice place to live, I think that it is silly to make that claim.

More importantly, should I believe anybody who says that they know? Moneysense’s ranking uses public information and massages it in some way.  Lots of people do this kind of exercise for many reasons (best country to live in (Canada is #2 in 2017, best country for business (Canada is #10 in 2016), …).  It would be better to know if information is relevant.  In other words, understanding the methodology is critical.  Professional statisticians and high quality data sources talk about methodology a lot.  If a methodology is not given, as was true of this exercise, attempting to reverse engineer it can raise important questions.

Based on the information provided by Moneysense, it appears that Continue reading

Research on Price and Time

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Academic research can seem rather odd to people not at a university.  Most of it seems obscure, until somebody needs to find the expert on a particularly troublesome topic.

This podcast explores some research done about 15 years ago by one of the members of GREG.  The discussion at the top of the page by the interviewer shows how this work shifts thinking on the connections amongst list prices, selling prices and how long it takes to sell, and is followed by the podcast.  (Click on the green arrow at the bottom to listen to the podcast itself.)

Understanding this very old problem has implications for understanding some current dilemmas.  Continue reading

Betting against a residential price bubble

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It seems like everybody has agreed that there is a price bubble in the Toronto residential real estate market.  And all bubbles end (eventually).  So, the next question should be: how to put your money where your mouth is?  How to profit from this knowledge?  The answers reveal a lot about real estate markets.  Continue reading

Change is common

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Spring is nearly here.  Students are finishing their exams and heading to summer jobs or co-op jobs.  Some are graduating into the Real World.  And high school students are about to choose where they will spend their next four or five years.  It is a time of change, excitement and a bit of fear.

Many people have trouble dealing with change because, in my opinion, they misunderstand it.  Change is common; disruption is annoying.  So, learn to accept change by preparing to be the disruptor instead of the disruptee.

At the recent Toronto Real Estate Forum, Frank McKenna noted that Airbnb is now the world’s biggest hotel company and Uber is now the world’s biggest car company.  People are worried about the decline of the once-dominant manufacturing sector because the number of employees down, but output is up.  As he concluded: the Stone Age did not end to end because of a lack of stones.  It ended because there was a better alternative. Continue reading

Student Case Competition

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Congratulations to the REH team from the University of Guelph which won Ryerson’s EYE Competition: Hillary Hetherington, Conrad Hilgendag, Stefanie Kaminski and Sasha Somjen.

Case competitions are something new since I was an undergraduate student.  The team was given an address and a week to put together a proposal about the highest and best use.  In this case, the “Stone Group” proposed that 20 Valleywood Drive in Markham be redeveloped into a six-storey mixed use office complex.

(Source: The Stone Group)

Case competitions are nerve-racking because Continue reading

Industrial Properties are Interesting

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Last Friday, the REHSA and Jeff Miller of Oxford Properties organized a tour though Milton, Mississauga and area showing off what is special about industrial properties.  This property type attracts less attention than residential or office, which is either a mistake or an opportunity for somebody.

(Source: REHSA)

For example, did you know that the GTA is Continue reading

Facts matter: Communication

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Previous posts have explained why it is silly to look to facts as if one of them was a magic bullet which would reveal the Truth. The facts matter but in combination. This post notes that, sometimes, even properly-weighted facts may not be enough.

For example, people have been debating whether or not there is a price bubble in Canadian residential real estate for nearly a decade. To a true believer on either side, the fact that the price is “high” is no longer important, either because it is added proof that prices will crash in the very near future or because it reveals some previously-unconsidered explanation.  As a researcher, I can say that it is hard for experts to identify bubbles in advance.

Weights matter when interpreting facts because debating the correct weights opens a new dimension to the discussion.  When arguing with somebody who attaches radically different weights to facts than you do, having the important facts may not be enough to convince somebody.  Communicating effectively, not just analysing correctly, turns facts into wisdom and action.

Continue reading

Facts matter: Conflicting messages

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Facts matter but a collection of facts rarely tells a simple story.  It is not as though any one analyst can look at the Toronto residential market and say that “the price bubble that will end on Thursday and will be followed by 3 years of decline”. Previous posts have noted that the not all data sources are equally important nor are they perfectly precise.  Both of these reasons explain why good analysts attach weights to facts to measure their importance.

Thinking about the weight which should be attached to each fact helps when making decisions because there will be evidence both for and against a decision.  Regardless of what the decision is.   Continue reading

Facts Matter: Confidence in a conclusion

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Good decisions in the real estate industry are based on facts.  Facts come from many sources (such as government, consultants, proprietary, …) but not all facts are equally important.  Some facts would have a big effect if they changed while a change in other types of facts have little to no effect.  This posting notes that some facts are unimportant because, even if they were to change, it is not clear whether the change is real or random.  Randomness introduces another reason to attach weights to facts.

In part, the importance of a fact depends on how much you can rely on it.  Facts as numbers are more reliable since (mostly) they are governed by the rules of statistics.  Facts as words are more slippery since the reliability of the fact depends on who is saying it and on whether the words can mislead.  Weighting facts is a way to recognize these considerations.  Continue reading