Comox Valley Real Estate market prices and sales are often followed statistics. By definition, statistics involve the organization, analysis and interpretation of data. The Vancouver Island Real Estate Board (VIREB) collects and organizes data for home and property sales in the Comox Valley. But who analyses the data and then interprets it for the home buyer or seller? Some Comox Valley real estate agents do this.
As with any data, statistics can be meaningful or they can be dead wrong. It depends on how they are used, and within what context and situation. Let’s briefly discuss an example. Often newspapers will report on the average sale prices of homes within a particular area in order to make some point about a real estate market. However, within the context of a Comox Valley neighborhood, median sales prices are more relevant. What is the difference?
Average sale price is just that – a mathematical average of the prices of Comox Valley homes that sold in a specific area over a specific period of time. For example, consider the following sale prices of 10 homes (expressed in thousands of dollars): 200, 225, 235, 245, 250, 255, 260, 340, 400, and 600. The average sale prices is $301,000.
The median sale price is based on the middle price in a list of sales prices when there is an odd number of sales, and the middle pair of prices in a list of sales prices when there is an even number of sales. Since we have 10 homes, we find the middle pair. The highest price of the five homes at the bottom of the price range is 250 and the lowest price of the five homes at the upper end of the price range is 255. the middle pair is 250 and 255 so the median is the average of the two at $252,500.
Clearly, there is a large difference between the average and median prices for this list of homes. The average price is much higher because of the influence of the two higher priced home sales. In a neighborhood where only a small number of homes sell, the average selling price may not be that relevant if there is a wide range between the prices. The median price is more representative of the more typical selling price. A rise in median price may mean that the market is strengthening, but it also may mean that homes priced in the lower end of the market are selling and leaving the market. This is where analysis and interpretation is important.
Another statistic that is often used is “Days on Market”. This figure tells us how long all active listings, in aggregate, have been on the market. “Time to Sell” refers to only those properties that actually sold. What happens when a property enters and leaves the Comox Valley property market?
Consider a home for sale that was on the market for 100 days and did not sell. It was taken off the market and placed back on again a month later. It was on the market another 120 days and did not sell. It was taken off again, its list price reduced and put back on. It sold in 34 days. Was the “Time to Sell” 34 days or 254 days? Also, how did this relate to the median time to sell versus average time to sell for the neighborhood?
Speaking of sales, let’s consider the following examples. Home one is placed on the local city real estate market well above market value, stays on for 120 days and does not sell. Home two is placed on the Comox real estate market above market value, the price is reduced after 30 days and it sells in 50 days. Home three is placed on the Cumberland real estate market just below market value and it sells in a week. No buyer is found for home one, a real estate agent other than the listing agent finds a buyer for home two, and the listing agent had a buyer for home three before obtaining the listing and the buyer made the seller an offer shortly after the listing contract was signed. The point to be made here is that it is important to understand the circumstances in order to interpret what actually happened and why.
To summarize. To properly analyze and interpret statistics, it is important to understand the market, the neighborhood of concern within the market, and the circumstances of a specific situation. To do anything less increases the risk of dealing with a less than meaningful statistic.
This blog just touches on how statistics can provide buyers and seller meaningful information, or not. Proper analysis and interpretation of the data is required if the statistic is to be meaningful in a specific circumstance. If you are a buyer or seller in the Comox Valley real estate market or you are considering buying or selling in this market and want to know more about the type of our real estate market and a specific neighborhood, contact me. I would be pleased to discuss your Comox Valley real estate information needs with you and provide you with meaningful information that will meet your needs. I would also like to hear from you. What real estate market statistics are most important to you as a buyer or seller? Join the discussion and post a comment on my Facebook page. Click on the discussions tab. Contact Brett Cairns of RE/MAX Ocean Pacific for a good understanding of the Comox Valley real estate market.
by Brett Cairns