Quote:
Originally Posted by chemgear
I'm not sure I understand what you are saying in regards to the median. The median is the sorted phyical numerical middle; for that to work wouldn't these higher income people be the only/most of the people buying and the rest with less income sitting on the sidelines statistically speaking? In theory, these outliers can't skew the median as much - which is why many like the median versus the mean/average metric.
|
I understand what median is; here's a better explanation.
The household income being compared is median and that's why it's not overly skewed by the outliers. (Good!)
On the other hand, the "4-11" being compared is a home price range, not median prices and ranges are skewed by the high end outliers (aka the 11's).(Bad!)
The stat that was thrown out in the thread is comparing a median to a range which is not consistent comparison and why it's misleading.
One number is dramatically skewed and the other isn't, making it look like average people are buying homes 11 times their income. NOT TRUE
We could reverse this and compare median home prices to income ranges and get similar skewed results. People with income of 10 million buying houses at $390,000. How affordable!!
In reality, if the extremely wealthy class was getting larger and started building/buying homes well beyond the traditional Calgary price range; this would result in a change from the narrow range (3-4X) to the wide range (4-11X) as the initial article indicated.
That's why it's much more accurate to compare median and median which is what I did. Even using just SFH, it's $390,000 to $90,000; a ratio of 4.3. Not nearly as bad as 11!!!
Quote:
|
Where does the $350,000 come from? I think the Calgary SFH median is currently $390,000ish (down from $425,000ish a few months ago.)
|
$350,000 includes condos and is the August numbers, which is nearly unchanged from the same time last year. I find it more accurate to include condos as well, as the median income includes everyone not just SFH buyers.
But we can use $390,000 if prefered; my point was about the misleading 4-11 stat, so this doesn't change much. A ratio of 4.3 is still what we're looking at.
edit: Went through the original "4-11X" article to do some further research and it confirmed my theory that it's BS: The fine print in the article
"It may however that wealthier Canadians who did capture much of the income growth over the past 30 years have been enabled by this additional income to speculate in real estate markets, thereby pushing up prices. The concentration of income with wealthier Canadians does not significantly alter the median income, but it would create an additional pool of capital that might be used for real estate speculation."
I know as a Realtor I'm supposed to provide the spin doctoring, not find it; but there you go