Muddy York: Toronto Real Estate Blog

By Nan Campion

In the news recently I have heard that the Toronto Stock Exchange is down 39% from this time last year and New York Exchanges are down 45.6% for the same period, unemployment in Canada increased .6% in January and now stands at 7.2%.  Do we really know what these numbers mean for the economy and most importantly for our own lifestyle?

As I have been selling real estate for the past 30 years I am even more sensitive to the statistics that are quoted with regard to property values. You cannot fault people for quoting statistics that they have seen in print but it can be frustrating for the real estate agent when they know this information is not accurate.   Here are two recent errors that I have seen in print. In a well respected magazine, an analysis was being done of property values in various areas of Toronto. One area that they chose to feature was Lawrence Park. I have no argument with researching the increase or decrease in property values over a period of time if they are accurate. What amazed me was that the writer of the piece didn’t do his research properly. While they were talking about homes in Lawrence Park they were quoting statistics for the C04 area of the Toronto Real Estate Board – Lawrence Park is not in the c04 area. It is actually in the c10 area. The statistics were completely inaccurate but I will wager that many people believed them.

Some time ago there was a map in a national newspaper that showed the areas in Toronto which received the greatest increases or decreases in value year over year.  I would expect that people probably believed these stats too as they were quoted from what would be considered a reliable source. However, although they might have been accurate they were extremely misleading. Why? Averages are only useful if there are enough sales to be informative.  In the first year that they quoted there were a normal number of sales based on the activity level of the previous few years and as usual there was a broad spectrum of price ranges. In the time frame measured for the second year there were very few sales. If there were only 2 sales in the second year and they both happened to be higher priced sales and you averaged them you would of course come up with a much higher sale price for that year. In analyzing the two time frames, the second year would look like it had increased in value considerably while in actual fact what had happened was that the number of sales had fallen greatly and therefore the information published was very misleading.

What does the Canadian Real Estate Association tell us?

According to the Canadian Real estate Association prices have declined 17 per cent in Canada this year.  In February they further stated that prices are expected to decline a further 17 per cent in 2009. Many people believe that those numbers therefore apply to us in Toronto. Do they? CREA is providing an average for the sale prices for the entire country. For us to apply these figures to our area would be like someone coming up with the average snow fall in the entire world per year. If that number came to 3 centimeters should we then expect to see 3 cms of snowfall in the Serengetti this year and 3cms in Toronto? I don’t think so.

What can I tell you about statistics? Consider the source and the premise on which they were calculated. If you really want to know what is happening to your property value ask for proof in writing of what has happened in the past few months to values of similar properties specifically in your own or similar areas. These are the numbers that give you a true estimate of the value of your home.

Nan Campion is an Award Winning Sales Representative with Royal LePage R.E.S./Johnston & Daniel Division.  Nan is a regular contributor to the Muddy York Blog.  Nan can be reached at ncampion@trebnet.com or visit her website at www.nancampion.com.