Real Estate

Toronto "Average" Prices - Help me with the math

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  • Feb 8th, 2018 5:15 pm
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[OP]
Newbie
Feb 2, 2018
42 posts
20 upvotes

Toronto "Average" Prices - Help me with the math

http://www.cbc.ca/news/business/treb-ja ... -1.4522047

I haven't dug through the numbers on treb website, but this is what I gather for average year-over-year prices on all segments.

"The Toronto Real Estate Board said Tuesday the average selling price of a detached home in the 416 area code was $1,283,981 in January, a decline of 3.9 per cent from the same month a year earlier."
"Prices for other types of housing, however, were higher. Semis changed hands for an average price of $936,623, townhomes sold on average for $712,186 and condominiums went for $543,279 — increases of 3.7, 8.2, and 15.1 per cent, respectively, over the past 12 months."

Detached prices: -3.9%
Semi: +3.7%
Townhomes: +8.2%
Condo: +15.1%

However, on "average" across all segments, the prices were down -4.1%. Does someone have an explanation for the math on this? Clearly it has to be some marketing gimmick. i.e. the data for one segment is for a particular area, whereas the numbers for another segment are for another area (or different timeline, I dunno). If anyone did the math, I would appreciate an answer.
57 replies
Deal Guru
Feb 22, 2011
10417 posts
12949 upvotes
Toronto
The average price is for the entire city and is the same area for all segments. The reason the average can be down when 3/4 of the segments are up is because houses cost a lot more so they have a larger impact on the average transaction of all types.
Penalty Box
Aug 11, 2005
4175 posts
1427 upvotes
no need to look at averages just look at what's happening to the SAME PROPERTY.

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Deal Guru
Feb 22, 2011
10417 posts
12949 upvotes
Toronto
Luckyinfil wrote: no need to look at averages just look at what's happening to the SAME PROPERTY.

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You do realize that by showing properties that failed to close in April you are just proving the average for that month was artificially inflated by sales that didn't close right?
[OP]
Newbie
Feb 2, 2018
42 posts
20 upvotes
rjg4235 wrote: The average price is for the entire city and is the same area for all segments. The reason the average can be down when 3/4 of the segments are up is because houses cost a lot more so they have a larger impact on the average transaction of all types.
No matter how you skin the cat, you cannot get a lower average than all 4/4 segments.

If you read the original post, you will see that the "overall average" is lower than all individual segments. Mathematically this is not possible, unless there is a marketing gimmick =).
Deal Guru
Feb 22, 2011
10417 posts
12949 upvotes
Toronto
Takanome wrote: No matter how you skin the cat, you cannot get a lower average than all 4/4 segments.

If you read the original post, you will see that the "overall average" is lower than all individual segments. Mathematically this is not possible, unless there is a marketing gimmick =).
You're mixing up two data sets. One is for GTA and the other is for just Toronto, the full numbers are here;

http://www.trebhome.com/market_news/mar ... mw1801.pdf

Average for all property types across the whole GTA is down 4.1%, it's broken down as houses down 9.1%, semi down 1.8%, towns down half a percent and condos up 14.6%.
[OP]
Newbie
Feb 2, 2018
42 posts
20 upvotes
rjg4235 wrote: You're mixing up two data sets. One is for GTA and the other is for just Toronto, the full numbers are here;

http://www.trebhome.com/market_news/mar ... mw1801.pdf

Average for all property types across the whole GTA is down 4.1%, it's broken down as houses down 9.1%, semi down 1.8%, towns down half a percent and condos up 14.6%.
OK, so my guess was correct. They changed the "areas" in the middle of the numbers... *sigh* Annoying, but understandable given their precarious situation.

Thanks for clearing it up. Thanks for the link as well.
Penalty Box
Aug 11, 2005
4175 posts
1427 upvotes
Takanome wrote: The problem with using isolated cases is that it is prone to bias. Hence, humans have historically resorted to using larger sample sizes and basic statistical values such as means/medians etc. The problem however is that often data when provided by an entity with vested interest (such as TREB) can be manipulated and mis-represented. Sometimes, this becomes very obvious when looking at numbers even at a glance (such as my opening post).

P. S. Note that I do agree with your view and do foresee the market further correcting (more than the present 20% down) given further rate increases planned by both Feds followed by Bank of Canada.
Except these isolated cases are statistical meaningful. Nobody walks away unless the market has dropped massively, and continues to drop in the future with no recovery.

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[OP]
Newbie
Feb 2, 2018
42 posts
20 upvotes
Luckyinfil wrote: no need to look at averages just look at what's happening to the SAME PROPERTY.

Image
The problem with using isolated cases is that it is prone to bias. Hence, humans have historically resorted to using larger sample sizes and basic statistical values such as means/medians etc. The problem however is that often data when provided by an entity with vested interest (such as TREB) can be manipulated and mis-represented. Sometimes, this becomes very obvious when looking at numbers even at a glance (such as my opening post).

Note that I agree with your view and see further correction (more than 20%) occurring due to rising rates by the Feds and Bank of Canada.
[OP]
Newbie
Feb 2, 2018
42 posts
20 upvotes
Luckyinfil wrote: Except these isolated cases are statistical meaningful. Nobody walks away unless the market has dropped massively, and continues to drop in the future with no recovery.

Image
Whoops I responded to the wrong person, hence had to quote again. Sorry about that.

Yes, I agree they are statistically meaningful. We all understand that what happened last year was quite terrible, and will continue to worsen in the future before getting better =).
[OP]
Newbie
Feb 2, 2018
42 posts
20 upvotes
Only 10% drop is not large enough. But given that it initially sold in May 2016, followed by Jan 2018 is significant.

Thanks for sharing.

I think by summer we will have a good idea where the market is headed :). It is getting exciting in my opinion.
Sr. Member
Sep 9, 2014
591 posts
536 upvotes
Vancouver
rjg4235 wrote: The average price is for the entire city and is the same area for all segments. The reason the average can be down when 3/4 of the segments are up is because houses cost a lot more so they have a larger impact on the average transaction of all types.
The average can't be more negative than the only negative segment. This is what OP is referring too. At worst the average should get close to -3.9, but not below. It's mathematically impossible.

Edit: actually I'm wrong here. Ignore this post.
Last edited by Bryan2B on Feb 7th, 2018 1:29 am, edited 1 time in total.
Deal Addict
Oct 6, 2015
2463 posts
1372 upvotes
Takanome wrote: However, on "average" across all segments, the prices were down -4.1%. Does someone have an explanation for the math on this? Clearly it has to be some marketing gimmick. i.e. the data for one segment is for a particular area, whereas the numbers for another segment are for another area (or different timeline, I dunno). If anyone did the math, I would appreciate an answer.
Even within those categories, you need to be very careful. A lot of brand new units, particularly in the condo sector, are being delivered and re-sold "brand new". While detached, for example, there has been very little detached actually built in Toronto proper simply because of land availability (for obvious reasons).

So an individual condo unit, for instance, may very well have fallen YoY, but the 'average' is up merely because a disproportionate chunk of the transactions were in relatively recent builds which make up a disproportionate chunk of the transactional volume.

This is why the TREB resisting the release of comprehensive data is an absolute travesty and seems to hiding significant price stagnation since the 2013 apex.
Deal Addict
Nov 13, 2013
2755 posts
1453 upvotes
Ottawa
BryanBreguet wrote: The average can't be more negative than the only negative segment. This is what OP is referring too. At worst the average should get close to -3.9, but not below. It's mathematically impossible.
It is possible because the mix can change. So if more condos compared to detached are purchased the average sales price will fall. In fact it happens that the overall average price goes down even though all categories go up slightly.

The average price is a very blunt tool. As Burnt69 points out newer condos can skew numbers up but conversely the smaller size of said condos skews the price down.
[OP]
Newbie
Feb 2, 2018
42 posts
20 upvotes
burnt69 wrote: Even within those categories, you need to be very careful. A lot of brand new units, particularly in the condo sector, are being delivered and re-sold "brand new". While detached, for example, there has been very little detached actually built in Toronto proper simply because of land availability (for obvious reasons).

So an individual condo unit, for instance, may very well have fallen YoY, but the 'average' is up merely because a disproportionate chunk of the transactions were in relatively recent builds which make up a disproportionate chunk of the transactional volume.

This is why the TREB resisting the release of comprehensive data is an absolute travesty and seems to hiding significant price stagnation since the 2013 apex.
I see, that’s a good point. I have kept hearing that condo prices keep soaring, but never quite tied it to the “mix” of sales I.e. more newer units being sold and older units potentially still taking a beating as the other sectors. It makes sense if you think about it. Thanks for the insight.
Deal Addict
Jan 17, 2006
2188 posts
2297 upvotes
Toronto
Takanome wrote: The problem with using isolated cases is that it is prone to bias. Hence, humans have historically resorted to using larger sample sizes and basic statistical values such as means/medians etc. The problem however is that often data when provided by an entity with vested interest (such as TREB) can be manipulated and mis-represented. Sometimes, this becomes very obvious when looking at numbers even at a glance (such as my opening post).

Note that I agree with your view and see further correction (more than 20%) occurring due to rising rates by the Feds and Bank of Canada.
Some of the bears continue embarrass them-self with those new shill accounts, pattern is the same.
I wish moderators were able to do something about it, just polluting the forum.
Sure, you can agree with yourself about 20% down and both of your split personalities will be wrong as you been for many years.
Market data shows that sliding stopped (beside some isolated cases) and prices are holding and will be steady or with modest increases MOM.
Deal Addict
Jul 14, 2002
2594 posts
1213 upvotes
Takanome wrote: I see, that’s a good point. I have kept hearing that condo prices keep soaring, but never quite tied it to the “mix” of sales I.e. more newer units being sold and older units potentially still taking a beating as the other sectors. It makes sense if you think about it. Thanks for the insight.
I actually took a deeper look into this condo segment a few days ago and found this. I was expecting condos to have taken an increased market share.
As for the condo prices, re-sales units have also increased. It's probably the new units setting a price floor that pulled up the re-sale ones.

"Interesting thing to note: Comparing Jan 2017 vs Jan 2018. You would think the condo segment to be capturing an increasing segment of the market.
But the reality is that the sales share % did not increase significantly. Prices have increased by double digits, but not sales %.

Sales (Jan 2017 -> Jan 2018)
(Detached) 43.6% -> 41.3%
(Semi) 8.2% -> 9.1%
(Town) 8.1% -> 8.9%
(Condo Town) 6.9% -> 7.9%
(Condo Apt) 31.5% -> 31.7%

Sources
http://www.trebhome.com/market_news/mar ... mw1701.pdf
http://www.trebhome.com/market_news/mar ... mw1801.pdf "
Deal Guru
Feb 22, 2011
10417 posts
12949 upvotes
Toronto
dantey wrote: I actually took a deeper look into this condo segment a few days ago and found this. I was expecting condos to have taken an increased market share.
As for the condo prices, re-sales units have also increased. It's probably the new units setting a price floor that pulled up the re-sale ones.

"Interesting thing to note: Comparing Jan 2017 vs Jan 2018. You would think the condo segment to be capturing an increasing segment of the market.
But the reality is that the sales share % did not increase significantly. Prices have increased by double digits, but not sales %.

Sales (Jan 2017 -> Jan 2018)
(Detached) 43.6% -> 41.3%
(Semi) 8.2% -> 9.1%
(Town) 8.1% -> 8.9%
(Condo Town) 6.9% -> 7.9%
(Condo Apt) 31.5% -> 31.7%

Sources
http://www.trebhome.com/market_news/mar ... mw1701.pdf
http://www.trebhome.com/market_news/mar ... mw1801.pdf "
Not sure if I am misunderstanding you but I think this data from TREB is for resale only, new sales wouldn't impact these averages.
Deal Addict
Jul 14, 2002
2594 posts
1213 upvotes
rjg4235 wrote: Not sure if I am misunderstanding you but I think this data from TREB is for resale only, new sales wouldn't impact these averages.
The pricing was just directed to "newer units being sold and older units potentially still taking a beating as the other sectors."
Just mentioning the reason why all condo prices are up, regardless of sales mix, etc.
Deal Fanatic
May 31, 2007
5018 posts
2162 upvotes
Also becareful how treb/ media they cherry pick the time period. Recently royal lepage said Canadian home prices increased 10.8%, but that was over the last quarter . Nice way to trick people using 1/4 of year.

All the types
Quarter over quarter
Year over year
Month over month

Treb area average entire Gta, all hosing types
Toronto only average, all housing types
Treb area average detach, entire Gta
Toronto only detach average

Confused yet?

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