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
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.
Case competitions are nerve-racking because 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
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
Last week, I attended an interesting breakfast meeting which launched a new book. If you are new to the commercial real estate business, I encourage you to read it: it is published by REALpac and is an updated version of their most popular publication. This comprehensive resource will be useful as you discover your position within the industry. (Full disclosure: I will not get a commission for saying such nice things.)
As with most meetings, the most stimulating part is not what was listed on the official program but what happened during the conversations. I was fascinated by a conversation on literacy and the challenges it poses for everybody. Continue reading
The real estate business is interesting because illiquidity means that the messy bits of the market process are messy for reasons not usually explored in textbooks. Thus, there is a lot to learn. (One of these days, I will be allowed to teach a course on Negotiations, but not this year.) I receive mailings from a group that specializes in it and, at the end of last year, they sent me some interesting messages on what happened last year. Here is some help with your negotiations this year. Continue reading
The start of a new year is a time of new beginnings. 2017 will be an interesting year, even if we do not yet know why. With that in mind, I encourage you to make a resolution to be more curious.
Two items in particular attracted my curiosity during this Break and I encourage you to check them out. Continue reading
The headlines show the many ways in which international events affect Canadian real estate markets. For example,
- Will Trump’s election cause too many Americans to move to Canada? (And, will Canadians want to stay in a Trump-branded hotel?)
- How will foreign buyers react to the new tax in Vancouver (and will its effect be bigger than the effect of the on-going anti-corruption campaign in China)?
- How do the tastes of recent immigrants to Canada differ from those of long term residents? (And do the tastes of first generation immigrants differ from those of second or third generation immigrants?)
- Will the competing initiatives on infrastructure in Canada and the US cause more investment in Canada or in the US?
If you attend the Real Estate Forum in Toronto at the end of November, you will see suppliers from many other countries talking with potential clients. You will also see many levels of government supporting international business links.
The real estate business is no longer all about “location, location, location”. So, the question is how to get ahead of this wave? Continue reading