People trust stats…. when they come from reliable sources. Me included. There is just something straight-forward and honest about numbers. But don’t be too trusting. Numbers can be easily manipulated, even from rock-solid, reliable sources, like TREB, the Toronto Real Estate Board. And when it comes to real estate, you can be sure that numbers will be bent to fit the intended message of the individual or corporation delivering it. So, I thought I would remind everyone that it is best to add a dash of skepticism when exploring your real estate stats. Because a lot of real estate stats can be very misleading if you don’t look at them long and hard.

Misinformation certainly seems to be the new currency of our day and age. Not to say that every thing we hear is fake news, but when it comes to certain things like real estate, we can hear or see explanations of the market that are oversimplified or have been interpreted in a sensational or misleading way. How do I know this? Well, I spend much of the time talking to my clients and even others real estate agents who have heard “facts” about the Toronto real estate market. So let’s go over some of the big misconceptions that seem to repeatedly trip us up.

THE DROP IN SALES IS NOT THE DROP IN PRICE

This happens all the time. It’s a common device used over and over again. The statistic is not incorrect, but the headline often suggests something different that what is explained in the body of a given article or blog. As an example, let’s start with a real Financial Post story that states in its headline: “Toronto Home Sales Plummet 35% From a Year Ago as New Mortgage Rules Bite”. Now, many people will interpret this to meant that prices are down 35%, but they are not referring to that at all. They are talking about the number of transactions that have occurred. In fact, after the headline, in much smaller print, we see that the GTA prices are down 12% year over year. Of course, 35% is the larger number, and that’s the headline with which the paper leads. For many people who are walking by this paper or just glancing over their Financial Post, they will think the prices have fallen 35%, not the number of sales. This statistic has nothing to do with the prices in real estate. There are just 35% less homes for sale than there were last year or last month. The funny thing is, these vague headlines often lead people to tweet that prices are down, with no vagueness at all, starting a whole storm of misinformation. The headline may be retweeted as: “Prices down 35% in Toronto” with a link to an article where the number of sales are down 35%. It’s not just Financial Post, it’s everyone. Here’s the Huffington Post doing it. And here’s the CBC doing it.

THE DISTORTED MIRROR: HOW STATS CAN LOOK IMPRESSIVE

Let’s take the average GTA price for a property (houses and condos combined) for February 2018 at $767,818. With that stat, I can say prices are the highest since October of 2017, which would be true. I can also say that prices are up an impressive 4.39% in just one month from the average of $735,557 in January! This would give the impression that February is quite strong, and prices have jumped a great deal in one month. The thing you need to add in here is context. January and December tend to be months where the prices go down. It’s not that is a cheaper time of year to buy, but more expensive houses tend to be for sale in the Spring and Fall months, bringing up the average price in those months. In most years, February has a higher price than January and December in the GTA. So, it’s not very impressive in the end. Now most major media sources know negative real estate news sells more, but occasionally, there is a positive spin as well. Some real estate brokerages will even try to take these monthly gains and spin them positively to give us the impression the market is stronger than it is.

TOO BIG TO BE ACCURATE

Now I can compare all the properties in February 2018 in the GTA to February of 2017, one of the hottest markets in the last 20 years, and this February 2018 would appear to be in trouble. With last year’s average at $876,363 for all property types, there is a 12% drop in price from last year, which could be terrifying if you bought a property around that time. You may be crying into your cereal bowl and morning coffee in disbelief cursing that condo apartment you bought in downtown Toronto in February of 2017. Dammit you should have just kept renting! But two things are worth mentioning to provide a little context. First, last year was one of the most unusual years in 20 years of Toronto real estate where prices spiked wildly between February 2017 and April 2017. Also, the GTA is way too large of a sample to draw conclusions on all properties and the value change in a year. If you purchased a condo apartment in Toronto in February 2017, the average price was $515,000, whereas in February 2018, it was $570,275. That’s an INCREASE of 10.7%. It tells us that condo apartments are doing much better than many other property types in the GTA. And that has certainly been my experience during this time. In fact, Toronto is doing much better than the surrounding suburbs. If I look at Durham region, condo apartments are down in price 1.5% year over year in February. I can also say that houses in Toronto have held their value much better year over year than the suburbs.

I rely on statistics all the time to see how the market is behaving, but I am surprised how badly some statistics are used by some sources to inform us on how the Toronto real estate market is performing. One of the key things to remember when looking at any real estate statistics -markets are very localized. Yes, a change in interest rates will effect all markets, but a condo in Corktown will behave differently than a McMansion in North York. In this day and age, the problem tends to be the amount of misinformation floating around us, even from legitimate sources that are interpreting real estate data in a misleading way. On top of that, people are often looking for guidance all the time when it comes to real estate. They google away and click at headlines and they find online. Like anything this can easily lead to people heading down the wrong path. So, be a little skeptical of your statistics. Numbers can be just as interpretive as words.