Many stories tell of the tension between developers and the current residents of the neighbourhood. The story usually focuses on developers making money and on the residents who want to protect the quality of life. In the end, the Ontario Municipal Board makes a decision. The villain in the story depends on who is telling it.
This tension leads all sides to distrust others and is very expensive. People who oppose all development are fighting against the inevitability of population growth. Developers who start by treatnig all residents as CAVE Dwellers, may be creating the problem that they complain about: by turning potential YIMBYists into NIMBYists. Sometimes, collaboration and actively searching for allies is a great way to add more value to a property.
Therefore, I was pleased to see a good news story in the Globe and Mail over the weekend. It talks about a prominent developer (Diamond Corp.), a big property in downtown Toronto and some details on how more than two years of discussion led to useful changes. That may sound costly but the alternative is also costly. Especially for that reason, this example should be instructive.
The Ontario government is again thinking that somebody needs to do something about math education. In the near future, many people will ask me whether they really need to know math to learn about the real estate business. Enough people think that numbers are not important in business because success seems to depend on getting things done, on communication, on personal relationships and so on.
This post is about how numbers, plus more advanced forms of mathematics, are important because solving problems is fun and useful. For nearly everybody, the real goal of learning math should be to become comfortable with it. Continue reading
When home prices go up, it seems that most people think that they can only continue to rise. When they stop rising, the critics of the previous view are listened to: maybe, today is the day that the crash starts. If only market analysis were that simple.
A long time ago, Paul Krugman said that there were three types of economics. With “airport economics”, things will either go up or down. The future will either be everlasting happiness or pain and devastation. These simplistic claims are not taught in a classroom because insight comes from a deeper awareness of nuances. Continue reading
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
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
Ethical awareness affects people involved in the real estate industry. There is a lot of money at stake and, because investors are separated from their real estate by distance or expertise or uncertainty, lots of exciting operational challenges. Research has shown that these same features also create opportunities to mislead or to be misled. So, operations and ethics in the real estate business cannot be separated.
Being ethically aware is a good thing. Many industry associations have codes of conduct or courses which include an ethical dimension. Unfortunately, it is hard to teach a 20 year old how to be ethically aware, especially if the “good answer” seems obvious in a two-hour test. 60 year olds have more life experience and know that distinguishing “good” and “evil” is not so simple.
So, the discussions about potentially unethical behaviour by the next president of the United States represent a teachable moment about an important topic. Continue reading
Well, that was an interesting election. It also adds special significance to a comment made by a student in my Real Estate Market Analysis course: the job of an analyst seems really difficult. Or, more poetically, “Prediction is very difficult, especially if it’s about the future.” (Nils Bohr, supposedly).
When expectations differ from reality, somebody is surprised. In this election, the media have settled on the word “stunning”.
Being a long term investment, the real estate business is full of such stress. The outcome, and sometimes the best business strategy, depend on unknown market conditions. That is why market analysis is both difficult and unavoidable.
Election night in the US offers two memorable examples which should remind you of best practices. 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
The interests of real estate businesses intersect with the interests of governments, often, although they are not necessarily aligned. The presidential campaign of Donald Trump offers a teachable moment which shows why character matters, for at least three reasons.
The evidence says that Trump insults others frequently and making “them” into an enemy of some kind. His campaign shows that you can go a long way by insulting people. It also indicates that insulting people also makes enemies of people, which reduces the chances of success.
This is relevant since a common test of the character is the Golden Rule: treat others as you wish to be treated. So, it is instructive to see how he reacts when others insult him.
Character matters, in politics and in real estate, because so much of getting things done is about groups of people doing things together. Important projects are complicated and involve many people. Thus, it is easy to get lost in a swamp of details, petty insults, to forget that goal and to react badly to somebody else’s behaviour.
Whenever real estate business intersects with government, as it often does, voices may be raised. Often everybody is unhappy about something. Insults may fly even during friendly negotiations. If that were the end, nothing would happen. That consequence matters in politics especially because governments rarely operate as a top-down or hierarchical organization. Success often depends on finding allies.
Character matters because allies are important, and allies rarely like being insulted.
I have listened to discussions during this American election and I am impressed at how closely it matches a 20 year old movie The American President. Its story contrasts the verbal insults of a presidential wannabe with the high-pressure decision-making environment of a sitting President. I think that its pivotal speech is amazingly relevant to many topics debated today.
Politically popular decisions are usually obvious. A dilemma is that, for any issue, different advocates can give good reasons why their preferred solution would be popular with others.
But the popular decision is not necessarily the right decision. Being popular is easy. It is harder to tell somebody that they are wrong.
By their nature, important decisions are hard decisions, where the consequences may be in the distant future and affect people whose names are not known. The discussions concerning sustainability is a recent example: Should the government impose a carbon tax of some kind? Using ideas from NetZero and LEED, should builders target more sustainable buildings? The immediate costs are usually obvious and the people who bear those costs usually express their opinions loudly. It takes a strength of character and some skill in persuasion to move forward on something which is unpopular currently.
In the real estate business, as in politics, character matters because the benefits of good decisions are felt for many decades after.