Blog by Mike Sjokvist | Real Estate Advisor

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Discussing 'Average' house prices

As this CBC article discusses: 'Average' house prices don't tell the whole story.
There are better indicators to glean market trends. When someone asks how house prices are doing in a particular neighbourhood, the question seems easily answered.

The big real estate boards all issue monthly price reports that spell out what the average selling price was in the previous month and how that compares to the month, and the year, before.

But there's a problem with trying to divine market direction from average price data. It's just too blunt a tool.

If real estate — as the saying goes — is really about "location, location, location," then average prices frequently don’t capture the reality of what's going on in a particular city or neighbourhood.

Calculating the average house price is as simple as adding up the prices realized for all home sales in a particular month and dividing by the number of sales. The problem with that metric begins to emerge, however, when one or more parts of the housing market don't act in tandem with all the other segments, as they seldom do.

To read the entire article [click here].