Are Comox Valley real estate statistics useful? How many times have you come across a statistic that was used out of context, or one that was used without any context? In this day and age, statistics are used just about everywhere to bolster arguments, for marketing, and to add credibility to a wide range of topics. Unfortunately, they are often used without any discussion of the circumstances within which they are relevant and applicable. In this Comox Valley Real Estate blog, I will discuss a number of hypothetical examples to make a point about statistics and their use in real estate.
Example One. A majestic Crown Isle home is newly listed for sale (Home B) and it sells in just over a week. The Comox Valley listing agent uses this sale as an example of a home that sold quickly in a buyer’s market. If this is all we knew about the sale would the statistic be impressive? Could we conclude anything about the real estate agent and that agent’s ability to sell homes? What if there was another similar home (Home A) on the market prior to Home B being listed? What if Home A had an accepted but conditional offer on it before Home B was listed? What if the offer on Home A fell through and the person whose offer had fallen through was advised of Home B being newly on the market by the listing agent of Home A? What if this person then purchased Home B? Would this set of circumstances change any perceptions about what might otherwise have been concluded about the listing agent of Home B?
Example Two. A Comox rancher style home for sale (Home X) was on the market for several months without selling. The owner of Home X decided to list with a different real estate agent. This new agent sold the home in less than a week. Impressive? What if the second agent convinced the owner to drop the price to a level lower than that offered through the first agent? What if the second agent already had a buyer that was serious about buying this home before the second agent obtained the listing? What if the second agent did not inform the owner that they had a serious buyer? Would this set of circumstances change any perceptions about the ability of the agent to sell homes?
Example Three. Comox Valley agents F and G obtain new business based mainly on referrals from others. Would it be reasonable to conclude that they are both fairly successful agents? What if Agent F obtains referrals from others based on the high level of service provided? What if Agent G obtains referrals from others who are being compensated for the referrals? Would this set of circumstances change any perceptions about either agent?
Example Four. Comox Valley realtor R lists a home for 4 months and it does not sell. During that period of time, this agent convinces the seller to drop the price twice. This agent convinces the seller to re-list the home (through a new listing) for 3 months at a further reduced price and it does not sell. This agent once again convinces the seller to re-list the home (through a new listing) for another month and it finally sells. The statistics associated with this “new” listing show that the home sold in a month. Agent S lists a similar home at a price comparable to the lowest price of the other home and it sells in two months. Can any conclusions be drawn about either agent? What do we know about the property? What if the home sold by Agent S backed on a busy noisy street while the home sold by Agent R was located in a quiet neighbourhood?
Example Five. Ten different styles of Courtenay homes for sale sold in 2010 for an average price of 300,000. In 2011, ten homes sold for an average price of $310,000. What conclusions can be drawn? Perhaps that the average price of homes increased by 3.33 percent from 2010 to 2011? What if in 2010 nine of the homes sold for $290,000 and one sold for $390,000? What if in 2011 nine of the homes sold for $250,000 and one sold for $850,000. While the first conclusion about the average price would be mathematically correct, would it be meaningful?
Example Six. Consider the headline in the newspaper that states Oceanfront homes with a view of the mountains sales up 50% in region Z compared to last month.” A pretty impressive statistic! What if in an average month 6 waterfront homes typically sold but last month only two sold? This month 3 sold and therefore there was a 50% increase over the previous month. Is the statistic as impressive?
Example Seven. Comox Valley property agent E lists 10 homes and 2 of them sell. Agent F lists 3 homes and 2 of them sell. What conclusions can be drawn? What do we know about the circumstances?
Why do I pose all of these questions on these hypothetical examples? The reason is this: Before any conclusions are drawn from Comox Valley real estate statistics, it is essential that the circumstances from which the statistics are being drawn are known. Avoid the temptation to come to any conclusions based on assumptions or perceptions. Statistics can be very misleading when they are applied or interpreted incorrectly. Know the facts, understand the circumstances, and only then draw conclusions when the statistics are both relevant and meaningful.
Brett follows and analyzes the Comox Valley real estate market closely. Should you wish to know more about it, and how certain statistics may or may not apply to your circumstances, contact Brett Cairns of RE/MAX Ocean Pacific Realty to set up an appointment to see him.
by Brett Cairns