Stats don’t lie… Above or below asking?

On March 26 of this year I read the following anecdote from a realtor in a facebook group:

So.. put an offer today on a townhouse in North Burnaby. It wasn’t priced low and the complex is going to need some significant upgrades over the next decade to the tune of around $75K per unit. The listing agent said he was anticipating 3 offers and they got 8; 4 of them over list and 3 subject free… This is why I don’t see our prices collapsing…

This reminded me to what I read in Daniel Kahneman‘s fantastic book ‘Thinking Fast and Slow’:

The great comedian Danny Kaye had a line that has stayed with me since my adolescence. […], he says, “Her favourite position is beside herself, and her favourite sport is jumping to conclusions.”

Kahneman, Daniel. Thinking, Fast and Slow (Kindle Locations 1435-1437). Doubleday Canada. Kindle Edition.

Kahneman got the Nobel Prize in Economics “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty.” In his book, he describes many many cognitive biases we all have and should be very aware of.

One of these cognitive biases he termed “What you see is all there is” (WYSIATI). It basically explains how quickly we jump to conclusions when presented with very limited data. We assume that what we see is representative of the rest of the data, extrapolate, and jump to a conclusion.

Another cognitive bias that is well documented is the so called confirmation bias, which is the tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses. We all suffer from this bias. So we have to make an active effort to keep an open mind and don’t assume that we are right. A little knowledge is very dangerous thing.

I’ve seen a lot of examples recently of these biases from people who report house sale information from Vancouver. As reported by the Vancouver Sun, there are people in twitter who just report houses that are selling at big losses. As we saw above, realtors often do the opposite, showcase units that sell at (big) gains and insist that the market is ok. Readers who listen to only one of the stories, through their WYSIATI bias, are easily persuaded.

The way to remediate this, is to look at stats, not anecdotes. Statistics do not lie.

In this post we’ll look at the stats of sold price vs asking price. We’ll start in the 2016-2017 period, and move to the present, 2018-19.

2016 – Boom in units sold above asking

2016-2017 was an anomalous period. I discussed the reasons for this in Part 1 and Part 2 of my series on why prices is Vancouver are so high. A way to represent this anomaly is to look at the percentage of units that sold above asking price. Steve Saretsky nicely documented this in his blog. These two charts show the percentage of units that sold above asking (left in Fraser Valley, right in Greater Vancouver area):

At the peak, more than half of the units sold above asking! This was extraordinary. This agrees with the anomalously high Sales to Active Listings ratio seen in this period, as I discussed in One swallow doesn’t make a summer. Seasonality of Real Estate in Vancouver

2017 – Pay above budget

This anomalous activity translated in people paying more than what they budgeted for. According to the CMHC survey to 30,000 households who bought a property in 2017, more than 50% of buyers in Vancouver and Toronto experienced a bidding war! This table shows that close to 50% of buyers ended up paying more than what they budgeted for (see the strike contrast of Vancouver/Toronto vs Montreal):

Things started to change in late 2017-early 2018 though. So let’s see how the numbers changed for this period.

2018 – Trend reversal

With the help of Johnny Oshika, we retrieved information for final asking and final sold price for the cities of Vancouver, North Vancouver, West Vancouver, Richmond, Burnaby, Coquitlam, Port Moody, Pitt Meadows, Ladner/Tsawwassen, and New Westminster for the period January 2018 to March 2019. There’s a lot to talk about from this data. Let’s start with the question of whether what the realtor reported (a townhouse selling above asking) is representative or not of the market today.

The following chart shows the percentage of units that sold above, at, or below asking for the whole region.

This chart shows how the trend that Steve Saretsky showed above reversed in 2018. In early 2018 still a few units sold above asking (red bars), but as the year progressed, the vast majority of units sold bellow asking price (blue bars).

Could it be that North Burnaby was different to the rest of the area? Let’s break it down by city to answer the question:

So the townhouse that the realtor referred to was one of two in North Burnaby that sold above asking in March, and 8 sold below asking price. That data point reported was not representative of the market.

Difference between Final Sold Price vs Final Asking Price

Now let’s calculate the average percentage difference between Sold price and Final Asking price for this period in the cities mentioned above (blue bars are below 0, red bars are above 0):

The number below the bars represent the percent difference between sold and final asking (top) and the total number of records for this period (bottom). Only 1/2 Duplex, townhouse, apartment and houses were included.

Broken down per unit type the trend is the following:

The number below the bars represent the percent difference between sold and final asking (top) and the total number of records for this period (bottom).

In the last chart you can see the contrast between detached houses, which have been selling below asking in this period, and strata, which on average still sold at or above asking in the spring 2018, but then joined the detached market and has been selling below asking. There could be some seasonality, but if you compare the three months of Q1 2018 vs Q1 2019 the trend is clear.

Difference between Sold Price and Initial Listed Price

We should also remember that comparing against the Final Asking Price is tricky. Sellers often drop asking prices, or delist/relist their units if they don’t clear fast. So let’s compare the sold price and the Initial Listed Price

The number below the bars represent the percent difference between sold and initial asking (top) and the total number of records for this period (bottom). Only Townhouses, 1/2 Duplex, Condos, and Houses were included.

And per unit type

The number below the bars represent the percent difference between sold and initial asking (top) and the total number of records for this period (bottom).


Spring is the time I watch many sports in the internet. The Stanley Cup, the Champions League, the NBA, etc. Given the current state of the real estate market in Vancouver, it seems that there is also a sport to watch in the internet. Jumping, but not in distance or height, but jumping to conclusions.

I also prefer to concentrate on physical sports such as running, biking, etc, and not on mental gymnastics. So let’s use statistics to overcome our WYSIATI bias. At the moment, in the Greater Vancouver area, the numbers show a clear trend, sales and prices are down, and units are selling below initial and final asking prices. Buyers are in the driver’s seat.

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