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
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
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
One of the messy facts of life about facts (bad pun intended) is that they are hard to work with. There are many reasons why facts do not reveal everything you want to know about consumer tastes, price trends and anything else that success in business depends on. These problems will not shrink in the future as Big Data takes hold and as smart buildings throw out so much information in real time.
Fortunately, a simple idea shows how to deal with much of the messiness. All facts matter but not all facts are equally important: different sources of facts imply different weights for a fact. I will focus on facts as numbers since, except for the added slipperiness of facts as words, as conversations, as rumours and as written reports, the same concepts applies.
Several different perspectives reveal why attaching weights to facts reduces the confusion. In a series of posts, I will talk about weighting and context, weighting and precision of data, weighting and trade off and weighting and communication. Here is the first: Continue reading
Politicians and journalists are two professions that are known to be easily confused by numbers. The consequences of that confusion are on full display during this election cycle in the U.S. Real estate people cannot afford to be confused by numbers, either because lenders will not allow them to go over budget or because the personal costs of getting the numbers wrong is scary.
This post uses some examples of the more annoying examples of innumeracy to show that, although a math class does not look like a class in literature, numbers convey meaning. That meaning is enhanced by making good comparisons. Continue reading
This American election campaign is an odd one for facts.
Many supporters of a Trump presidency like the idea that Trump “tells it like it is” and that Trump does not use polite code words to hide reality.
Others have noted that we have entered a “post-truth political era” in which fact checkers state that a politician’s lie is so bad that it is labelled as “pants on fire” or “four Pinnochios”. Some people try to assert that feelings and perceptions are kinds of fact.
It is hard to find a memorable lesson from this teachable moment, since some of them repeat what should be obvious. Some commentators have noted some more subtle lessons. Continue reading
Yes. Somebody should do something about high house prices. You are somebody. And whatever you do would count as “something”. So do it!
Based on recent reports, I worry that this is the thinking style of the new federal government. The Finance Minister has talked about doing a “deep dive” into the data. They must be feeling a lot of pressure from people in Toronto and Vancouver to do something about high prices but media headlines often overlook the real problems.
A bit of perspective would help. The last Prime Minister had an M.A. in Economics and, still, his policies such as “boutique tax credits” ignored most of the simple advice given in Econ 101. Econ 101 tells us that prices are never a problem. (To be very clear: prices being “high” is not the definition of a “price bubble”!) In a market context, they are always a symptom of something else (i.e. matching the demand curve to the supply curve). Continue reading
This is a game changer. I am not using this label in its common, but incorrect, way to create dramatic tension. The decision by the Competition Tribunal will literally change the rules of the game for buying and selling homes because it changes the relationship between home sellers and real estate agents, between buyers and sellers, amongst agents and even affects people who are not active in the market.
This post unpacks this idea a bit, by using some familiar ideas and by looking at the US experience. Continue reading
Today is the day designated to record how many and what kinds of people live in Canada. The return of the long form census is a big deal, as Statistics Canada’s promotional activities explain. It provides the information needed to make evidence-based decisions; while you can debate the meaning or significance of the evidence, denying that evidence is almost always a serious mistake.
Media reports have noted how excited people are to provide their information, and to suggest questions which should be asked.
The previous Conservative government was worried about an invasion of privacy (while ignoring the Statistics Canada Act, which accounts for such concerns and has existed for decades). They also worried about people going to jail for not answering the questions. Since Statistics Canada has had five years to prepare, there are reports on the follow-up teams which the new government plans may use to ensure compliance.
A couple of weeks ago, some of our students organized a competition for students across Canada. As much as I would like to think that everything educational happens only in a classroom, much learning happens outside of a classroom. Future leaders take advantage of the opportunities offered to them and show what they are capable of.
The Undergraduate Real Estate Case Competition (URECC) invited teams from universities across Canada to study a property for more than a month and pitch their ideas to a panel of judges drawn from the most senior level of the industry. The organizers, led by Sam Ives, Dan Adams, Sarah Reeve and Jill Brown, talked friends in the industry, such as the title sponsor Allied REIT, and raised about $40,000 to host the event at the Ritz Carleton in downtown Toronto. Continue reading