In our team, we regularly interact with clients or potential clients who think that the headlines or articles they’re reading in the media are reflective of their situation.
The reality is that what is true “in general” for “the” market can be completely wrong when it comes to a specific situation.
Every month around the 5th or 5th of the month, the Toronto Regional Real Estate Board releases a document called MarketWatch, where they go over the latest stats and what they mean. The media uses this as the basis for their articles on what is happening in real estate and a flurry of articles will show up wherever you get your news.
While these headlines or articles are accurate on an overall basis, assuming it is relevant to your particular situation can be a big mistake. We reviewed the August 2023 MarketWatch data along with the big headlines to see where what’s true in general is absolutely false for specific situations.
Headline: Sales Down 5% Compared to Last Year
Let’s first look at the number of sales in August 2023. The headline is that sales are down about 5% year over year, based on the fact that we had about 5,300 sales in August 2023 compared to about 5,600 sales in August 2023.
Details: Detached and Semis Sales Down 12%, Condo Apartment Sales Up 8%
That 5% drop is calculated using the four housing types and averaging it out. That is technically accurate, but when you get into the details, you see some big differences.
- Detached house sales are down 12%
- Semi-Detached house sales are down 14.4%
- Townhouse sales are up 0.6%
- Condo Apartment sales are up 7.6%
Depending on what housing type you’re focused upon, that 5% drop in number of sales becomes quite inaccurate.
If you go even deeper into the details, you can see some differences between what’s happening in Toronto versus the 905 regions. The biggest discrepancy is in the townhouse sales in August where there is an 18.5% difference between the 416 and the 905. In Toronto, the number of sales of townhouses went up by 15.6% in August 2023 compared to August 2022, whereas in the 905 region it went down 2.9% year over year. That averages to 0.6%, which is basically no change, but if you ask someone in Toronto if there were more sales of townhouses in August compared to last year, the answer is a definitive yes.
Headline: Average Price Unchanged from Last Year
The average price in the GTA (including Toronto) in August 2023 was about $1,082,000, compared to about $1,079,000 a year earlier. It’s technically up 0.3% but basically unchanged.
Details: Everything but Condos Went Up
If you assume that your home is worth the same as this time last year, you are likely to be off by a considerable amount. Here’s what the year over price change looks like by housing type.
- Detached house prices are up 2.8%
- Semi-Detached house prices are up 6.9%
- Townhouse prices are up 3.9%
- Condo Apartment prices are down 0.9%
If you own a semi and think that you should sell your house for what your neighbour got last year, you’d be missing out on tens of thousands of dollars of appreciation.
When we look at prices, the percentage change can be even more misleading. This is because a swing in the most expensive housing type (detached homes) can have an outsized impact on the percentage change in average price for the market as a whole.
The average price for a detached home in the 905 is about $1.36M as of August 2023. That is up 3.8% compared to a year ago, which equals about $50,000. In the same time period, a condo apartment in Toronto went down 1.8%, but given the average price for a condo apartment in the city is about $724,000, that’s around a $13,000 price drop. Percentage changes are popular because it allows you to compare against different types of housing, but when you use it for an overall average change, it can be incredibly inaccurate for any one of the different types that make up that average.
It is always interesting to see headlines about what is happening in “the” real estate market but we hope that this review shows that what is happening in general can be incredibly different than what is happening with a specific housing type or area.
If you’re keen on learning what’s going on with your home, then get in touch and we’ll get into the details together!