Statistics can be manipulated in a lot of ways to tell any type of story you want them to. 3 statistics that I don't think are worth the paper they are printed on are: 1. Average sale price; 2. Average days on market; 3. Price to list ratio or %. These numbers are important to have but to get the true stats you need to have access to the Realtor version of MLS and the history of each individual property. Something the general public dose not have access to. Of course when I'm representing a buyer I'm armed with all these stats and not using some vague averages that don't really mean anything.
There are 3 kinds of lies: Lies, Damned Lies, and Statistics" - Mark Twain
Here are the 3 most commonly misunderstood real estate statistics in the media:
Canadian Housing Starts Fall
This shouldn't really matter to buyers or sellers out there. While this is related to the real estate market, it is more relevant for the construction industry than it is to the resale housing market.
Remember, these are new home construction figures: not sales or pricing numbers. Unless you're a construction worker or materials' supplier, this type of information is largely irrelevant to your real estate decision-making process.
Home sales drop 30%
This kind of information is important for buyers and sellers to know and also helpful for realtors to use. A drop in home sales is sometimes a precursor to lower prices down the road. That said, there are a multitude of reasons that home sales could slow that wouldn't also result in a corresponding drop in prices.
It is therefore important to remember that these are unit sale figures, not price figures. These statistics also generally need to be seasonally adjusted to reflect the fact that sales tend to be slower in the winter and summer as opposed to the spring and fall. You should talk to a professional to see whether a drop in sales velocity is because of a slowing market or because of some other extraneous event. Average House Prices Expected to drop by 15%
This is the most misunderstood of the media reports that come out because averages are a terrible metric to measure house prices.
This is because the type of home that is sold in a given month strongly influences the outcome. For instance, if a lot of luxury homes are sold one month, then the average price of homes will go up, even if the typical home price doesn't change.
This entry was posted on October 25th, 2012 by Owen Bigland | Posted in Video Blog