If you've been following the Toronto housing market and/or following any panicky resale agents/brokers on Twitter, you'll know that things have shifted over the last few months. Here's what broker (and my friend) Christopher Bibby had to say about the market in his most recent newsletter:

As anticipated, April has ended up being one of the defining months of the 2022 real estate market. With the recent fragility we are seeing, it is clear that the market peaked in February. In fact, the Toronto Real Estate Board, in its most recent Market Watch, claims that month-over-month prices could be down by 2.6%—which is very likely. TREB also indicated that the overall number of year-over-year transactions in March was down by approximately 30%. I deferred the release of this newsletter because weekend activity positively altered some of my previous commentary. The key takeaway, however, is that sentiment has shifted in our marketplace.

But let me paraphrase the conclusion of Bibby's newsletter with two words: who cares? If you think that Toronto (or some other city) will remain an important global city by 2025, 2030, or even 2040, you really shouldn't be fussed by what the market is doing over the span of a few months.

Moreover, I can tell you that my least favorite time to go out and buy real estate is when everyone else is submitting silly offers and clamoring to buy whatever they can find.

My friend Christopher Bibby sent me this article over the weekend. It's by Brian Potter -- who writes an excellent newsletter on Substack about construction things -- and it's about why it's so hard to innovate in construction.

To explain this, he starts by showing that the distribution of cost outcomes in construction projects tend to be both skewed toward the right and "fat tailed."

What does this mean? It means that construction projects have a tendency to run over a budget. And that they are much more likely to be over budget than under budget (right-skewed distribution). According to some data from the US Navy, the difference in likelihood is 10x.

At the same time, there are also instances where projects don't just run over budget, they run really over budget (fat tail). All of this is different from your normal distribution where you have a symmetrical curve and thin tails. I guess construction isn't normal.

One of the reasons for this abnormal distribution is the fact that construction suffers from what Brian calls "cascading failures." This is kind of intuitive, but it is everything in construction: In order to complete Y, you need to complete X. If X is delayed, then everything is delayed.

Because of these dynamics, changes to the construction process are perceived as incredibly risky. This has created a bias toward incremental rather than fundamental innovations.

For the full article, click here. It's worth a read.

If you've been following the Toronto housing market and/or following any panicky resale agents/brokers on Twitter, you'll know that things have shifted over the last few months. Here's what broker (and my friend) Christopher Bibby had to say about the market in his most recent newsletter:

As anticipated, April has ended up being one of the defining months of the 2022 real estate market. With the recent fragility we are seeing, it is clear that the market peaked in February. In fact, the Toronto Real Estate Board, in its most recent Market Watch, claims that month-over-month prices could be down by 2.6%—which is very likely. TREB also indicated that the overall number of year-over-year transactions in March was down by approximately 30%. I deferred the release of this newsletter because weekend activity positively altered some of my previous commentary. The key takeaway, however, is that sentiment has shifted in our marketplace.

But let me paraphrase the conclusion of Bibby's newsletter with two words: who cares? If you think that Toronto (or some other city) will remain an important global city by 2025, 2030, or even 2040, you really shouldn't be fussed by what the market is doing over the span of a few months.

Moreover, I can tell you that my least favorite time to go out and buy real estate is when everyone else is submitting silly offers and clamoring to buy whatever they can find.

My friend Christopher Bibby sent me this article over the weekend. It's by Brian Potter -- who writes an excellent newsletter on Substack about construction things -- and it's about why it's so hard to innovate in construction.

To explain this, he starts by showing that the distribution of cost outcomes in construction projects tend to be both skewed toward the right and "fat tailed."

What does this mean? It means that construction projects have a tendency to run over a budget. And that they are much more likely to be over budget than under budget (right-skewed distribution). According to some data from the US Navy, the difference in likelihood is 10x.

At the same time, there are also instances where projects don't just run over budget, they run really over budget (fat tail). All of this is different from your normal distribution where you have a symmetrical curve and thin tails. I guess construction isn't normal.

One of the reasons for this abnormal distribution is the fact that construction suffers from what Brian calls "cascading failures." This is kind of intuitive, but it is everything in construction: In order to complete Y, you need to complete X. If X is delayed, then everything is delayed.

Because of these dynamics, changes to the construction process are perceived as incredibly risky. This has created a bias toward incremental rather than fundamental innovations.

For the full article, click here. It's worth a read.