REM 300 Lecture Notes - Lecture 5: Royal Lepage, Weighted Arithmetic Mean, Cash Flow
15 Mar 2018
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There is less activity in the housing market in the winter in canada. Data therefore shows seasonal fluctuations that can be misleading. Several ways to correct: use annual values not month to month, compare q4 of 2016 to q4 of 2017. The average sales price is determined based on the houses that actually sold in a given period. )t would look as if average sales prices went down, when really; the set of houses that sold was unusual. Some firms use weighted average: e. g. 40% - bungalow, 60% - two-story. Housing condition: neither the weighted average or the types of category correction solve for the house condition problem. One way to correct for these sampling problems is to create a repeat sales index. Only houses that sell twice are included in the index. If a house sells twice, then we can be sure that the price change is due only to time.
