There’s a great quote by Bobby Bragan.
“Say you were standing with one foot in the oven and one foot in the ice bucket. According to the percentage people, you should be perfectly comfortable.”
It’s a vivid image and we strongly recommend you don’t try it out in person.
The real estate industry produces tons of statistics and the media loves using market averages as if they are representative of the reality for a specific buyer or seller.
We know that buyers and sellers aren’t buying or selling the market, they’re buying or selling a specific property. The average is interesting as a representation of how things are going as a whole, but a danger with averages is that they can be heavily swayed by outliers. Outliers are data points within a data set that are particularly high or low and they can skew the average number considerably.
Where possible it is better to use the median rather than the average. The median is when we take all of the numbers in the data set arranged from lowest to highest and take the middle number. The median is particularly helpful with data sets where we don’t have a normal distribution. Real estate is very prone to skewed data and as such, averages can be very misleading.
We’re at the end of April and you’ll shortly start seeing media stories about the real estate market. They will mostly be about the market as a whole and use averages to tell a narrative. We wanted to look at a specific segment to see what we discover when we go beyond averages.
We pulled the data on the sales of condo apartments in Toronto’s CO1 district from April 1st to 30th.
We took the data for different price segments and laid it out for analysis. The chart below has the lowest (red) and highest (green) identified and we looked at sale prices ranging from below $500K to over $1.5M, segmenting by $100,000 price segments. We’ve included it for interest sake, but you don’t need to make sense of it – we’ve done that for you.
Here’s what we learned from reviewing these statistics.
The most common sale price for a condo was between $600K to $800K
The busiest price segment in April 2021 for condo apartments was the $600,000 to $700,000 sale price range. There were 165 sales during the month in this price range. The second busiest segment was the $700,000 to $800,000 sale price range, which saw 103 sales. This means that of the 558 condo sales we saw in April, about half (48%) were in the $600K to $800K price range. The least common price segment was $1.4M to $1.5M, which only saw 9 sales in April.
Just under $1M was the best list price for sellers
When we look at the median sale to list price ratio, the best price segment for sellers was $1M to $1.1M. Within this $100K band, the average sale price was 108% of the list price. Sellers who listed at $998,000 sold for $1,050,000 on median. The worst price segment for sellers (and therefore the best for buyers) was the $1.3M to $1.4M sale price range, which saw sellers get 99% of their list price on median.
The most rational buyers were in the $1.1M to $1.2M price range
If we look at the spread in the different price segments (the difference between the lowest sale to list price ratio and the highest) we see that the tightest range is found in the $1.1M to $1.2M price segment. The media sale to list price is 100% on the nose and the lowest is 96% and the highest is 122%. This 26% range means that buyers in this price segment didn’t go to the lows or highs of other segments. That dubious honour belongs to the $500K to $600K price range, where buyers got as low as 93% of list price and paid as high as 147% of list price, for a whopping 54% spread.
There as no specific price segment that took a lot longer to sell
The median days on market was quite consistent across the different price segments and it only ranged from 6 days to 8 days for any of our $100K price bands. The slowest market was the $1.1M to $1.2M price segment, which took 9 days on median. The fastest was the $1.4M to $1.5M segment, which took 6 days to sell on median. We must always take the DOM stats with a grain of salt as TRREB allows agents to terminate a listing and relist the same property, effectively resetting the days on market when the “new” listing sells. Regardless, we did not see any price segment where all the condos were sitting for weeks or months and as a whole, we can safely say that the condo market is moving quickly.
If you want two bedrooms, you’ll need a minimum budget of $800K
The median number of bedrooms and washrooms stays pretty consistent. About two thirds of the sales in April (365 of the 558 sales) were under $800K and had one bedroom and one washroom. Over $800K, you see two bedrooms and two washrooms on median across all of the $100K price segments. We don’t have the square footage statistics for the sales and while the units do get larger as the price goes up, it is more about the neighbourhood and building than size.
While the above stats are for a specific time (April 2021), a specific type of property (condo apartments) and in a specific area (Toronto C01), we can do this sort of review and analysis at any time, for any type of property and in any area. When you are thinking about buying or selling, work with agents who don’t rely on market averages. When you’ve got a specific property you’d like to sell or buy and you need specific information. If that sounds appealing, don’t hesitate to get in touch so we can help move you forward.