Lies, Damned Lies, and Statistics
| July 14, 2011
I’d like to step away from the usual RECA Blog post content to do something a little different this week.
“Lies, Damned Lies, and Statistics.” Popularized by Mark Twain, but largely attributed to British Prime Minister Benjamin Disraeli, the phrase describes the power of numbers, specifically statistics, to make persuasive arguments that maybe wouldn’t be that persuasive without them.
As real estate industry professionals you see and reference statistics, particularly market statistics, every day. Turn to the real estate section or the business section of a major newspaper any given day and you will likely see an article trumpeting the inevitable huge decline or huge rise in the real estate market. So which is it?
Just this morning I scanned real estate articles on the Calgary Herald website, the Globe and Mail website and the Edmonton Journal website and found the following headlines:
Will the housing boom last indefinitely?
Calgary house prices to increase by 3.8%: Royal LePage
Calgary new home prices flat: Statistics Canada
Local house prices sliding (Edmonton)
New house prices rise in May
Housing prices may have hit the top
Calgary MLS sales soar in June
Edmonton home prices to drop, survey says
Calgary MLS sales top-year ago levels
Edmonton real estate sales up, prices down in June
Canadian housing bubble close to bursting: Capital Economics
These are articles that have all been posted since June 29, and each one makes very persuasive arguments using numbers, lots and lots of numbers.
So, which is it? Is Canada’s housing market set to burst? Are Calgary and Edmonton housing markets going to climb to unprecedented heights? Will Canadian house prices drop 10+ per cent in the next six months?
The fact is, no one knows for sure. All of these articles make educated guesses – based on the past real estate market, the current economic climate and other market forces (net migration, oil and gas prices, etc.) – but no one knows for sure what is going to happen to the real estate market. And anyone who tells you differently is nothing more than a snake oil salesman.
Now, none of this is to say completely ignore market statistics or news articles. Be a student of the real estate industry. Read as much as you can, learn as much as you can – and try to make sense of it. Put yourself in the best possible position to answer client questions when they come to you for advice, but also be upfront that there are questions that cannot be answered with anything near certainty. It is in doing so that you will give your clients the best possible service and advice you can.
How do you ensure your clients are entering the market with realistic expectations, either as buyers or sellers?