Wednesday, March 2, 2011

The problem with "evidence"

I've often wondered why the filter that different people use to view the evidence surrounding them can render a picture so different than what others would consider reality.

If you've ever read a political blog, or the comments on a political story on a media website, you'll know exactly what I mean. Heck, for that matter, if you've spent enough time on this blog and read the various comments you've likely caught yourself wonder WTF is that guy thinking? I like to think I've inspired a few of those moments for you readers over the past 4 years myself.

I had a couple WTF moments today that left me scratching my head at just how brain farts thoughts get tossed out as evidence in the world of real estate marketing.

On Twitter today I came across a tweet from what I assume to be a well-regarded, well-known and fairly successful REALTOR®. The guy is, of course, bullish on the Vancouver real estate market where he works. He's likely seen first hand evidence of the Hot Asian Money being thrown around on the west side of town his offices occupy. It's beginning to feel like spring, so of course listings and sales activity is increasing. But this tweet didn't just say "Wow, I'm really getting busy, got 2 offers and 4 showings today." Nope. It said something along the lines of this:
Vancouver real estate market is hot. Listing increased its price today from $1.7M to $2.2M.
Face, meet palm.

There's three things far more logical to connect with a listing price increase than evidence of a hot market:
  1. A seller who believes their home should fetch $2.2M instead of $1.7M (despite not selling it for $1.7M yet, in other words... face, meet palm)
  2. A REALTOR® who took over a listing renewal by telling the vendor the reason why they hadn't sold their home at a lower price was because they were targeting the wrong market (H.A.M. types don't spend less than $2M in case you didn't know)
  3. It's a slow morning, and a not yet two cups of coffee thinking one to boot, so the REALTOR® in question found himself hanging out at StartBucks, iPhone4 in hand, trolling for clients, and thought he'd drum up some high priced listings business by tweeting out to his 2,439* followers (2,429** of which are other REALTORS®) something that may or may not be true and something that the majority of people wouldn't think to question the truthiness of anyway.
Let me bring this a little closer to home. I'm checking out a Facebook page. Over on the right is a link from a REALTOR® promising me access to stats I can't get elsewhere. You can see where this is going: I have an addiction to real estate numbers so, despite my reservations, I clicked the link and ended up on the REALTOR®'s blog. OH, THE HORROR! Here's what I found:
A strong economy drives employment, and employment drives immigration. Of course, these new residents need a place to live! With the recovering world economy and emerging asian markets on a real tear, BC is in a great position to take advantage of the next decade.
Apparently H.A.M. is being tossed around in Fernwood, Fairfield and Oak Bay too, not just the west side of Vancouver and Richmond. But the best part of these "statistics" I received after I clicked the Facebook ad was the link that was offered as their source took me to this story here, a story that doesn't mention Victoria specifically, doesn't talk about immigrants, says BC's unemployment rate is up post-Olympics and that Saskatchewan is the shining light of the West with Saskatoon and Regina growing fast due to their proximity to the economic engines of oil and agriculture.

* I made this number of followers up.
** I made this number up too, but if you're on Twitter and follow REALTORS®, you can be forgiven for thinking this is true.


HouseHuntVictoria said...

If you figure out "the who" behind my quotes in this post, please don't name them here or link to them. First, I wouldn't want them to see an undeserved increase in web traffic and second I didn't name them because I'm not singularly "calling them out." These are, unfortunately, just two minor examples of a much wider problem.

But feel free to give us examples of other face, meet palm real estate marketing moments... just for sh&ts and giggles (don't link, don't name, please).

Just Wondering said...

I'll toss out three moments. There's many more but I don't want to hog the space. Number one: Spent several hours driving to see a property on the north part of the island. Had quizzed the realtor heavily looking for issues I should know about. Got there and noticed the neighbouring property was a cemetery. Realtor didn't think it was an issue (I didn't either but my wife certainly did). Number two: Viewed a lovely property at Shawnigan Lake. Again quizzed the realtor before going. Went for a walk around the property and happened to notice the railway tracks. What part of "quiet property" don't you understand? Number three: Yet another viewing of a country acreage. Realtor didn't think it was worth mentioning that there was no road access and could never be. I recognize the need to pump up the strong aspects of a property but I don't see the need to lie by ommission unless you really want my foot up your ass. Phew, good vent, thanks.

a simple man said...
This comment has been removed by the author.
a simple man said...

Just Wondering - these realtors have done a great service to you by demonstrating their ineptitude from the start. Worse to find out about it when they are negotiating hundreds of thousands of dollars on your behalf. I have no patience for realtors that are anything but completely frank. They can only try to fool me once.

jesse said...

All you need for higher prices is for people to believe foreign money is coming. Victoria's Realtors need to try harder.

The longer this type of market meme progresses the more it will become truly historic. This has a chance to be gold rush epic.

Just Jack said...

As I have written before. In my opinion the weakest market would be the outlying areas, retirement properties and condominiums.

Like the recent sale of a condominium on Kaltasin in Sooke, that took 113 days to get a sale at $136K.

some past sales on the same condo were:

$195K May 2006 down 30%
$120K May 2004 up 13%
95K Jan 1997 up 43%

Another freak sale, sure it is. But they are starting to string together.

Can Victoria prices roll back to 2004 levels? Absolutely. When the bloom comes off the real estate rose, and you become the only bidder on a property - prices have to fall.

Waiting said...

New listings are rolling in fast and furious today. Still crazy prices but lots coming on the market.

Just Jack said...

Even James Bay town homes are not immune to a lack of bidders.

Such as the recent sale on Superior street at $478K. Assessed at 498K. The owner bought the home 18 years ago for $233K. So he doubled his initial investment in 18 years.

Last sale of a similar townhome on Superior street was for a 300 square feet smaller townhome for $490K.

Looks like price might be going down in this sector of the market too.

I think in real estate, its important to pick wisely the type of property you purchase. Not all real estate is created equally and size does matter to some extent. Some think that people will have to learn to live in smaller and smaller spaces. I don't think so, because when the market slows these small micro condos and town homes take a real beating. This is not the time to get on the property ladder with micro sized real estate.

Actually, if you don't have deep pockets, real estate is not your game. Real estate is now like high stakes poker, you need a lot of chips to stay in the game. And in two weeks, the banker (CMHC)is going to be giving out fewer pocker chips.

Olives said...

Someone I know just purchased a brand new mid-range condo for approximately $75,000 less than the assessment they just received.

MC said...

I find it interesting to read about Edmonton's corrections as well - though there still seems to be a bit more people who are not on the bear side. Average condo prices have seen drops of almost $24000 since September... (

Al said...

Then they should appeal the assessment and get it changed right away (= pay less property tax).

Tim Ayres said...

HHV - interesting post - but can you blame the seller for wanting more money when something like this happens:

Days on market: 5, $700K over asking. Obviously one sale is not representative, but maybe there really is some foreign money out there pushing up prices on the west side of Vancouver.

Just Jack - that condo you refer to on Kaltasin is in a building which may need repairs. No clear indication of scope of work/when/if/how much, hence the last few sales have been pretty low as buyers price in the potential bill.

I'm in Newfoundland at the moment - think Victoria prices are crazy? Move here, you can buy along the waterfront in many places for less than $100K.

HouseHuntVictoria said...

@Tim Ayres,

Hope you're enjoying The Rock!

I spent a year in Halifax in the 1990s, used to drive down the South Shore all the time. Often wonder now why I didn't find a way to buy a waterfront lot in a small village to retire on. If you can make it happen, you should do it.

Who knows why that house sold for $700K over asking? My guess is, the REALTOR® in question priced it well below market value on purpose to create a bidding war. Obviously in that case he was successful as even though DOM indicate 5 days, that's likely the time it took to process the bids and remove whatever conditions were placed on the sale before he was able to mark it pending.

But the example I provided, which was only a tweet, and not an actual listing (though I assume it was true), was of a property that didn't sell. So if it truly was under priced, why didn't it attract multiple H.A.M. offers?