The overall mood about the current state of Toronto’s real estate market typically depends on the two most commonly reported statistics in the press, average price and sales volume. Average price is a popular measure but can be easily skewed by changes in the housing stock being sold.
I often have clients ask me for a list of the best and worst performing neighbourhoods in the city, based solely on changes in average price. The problem with this approach is that average prices can be very easily skewed. For example, if a new condo with average priced units is completed in a neighbourhood well known for expensive detached homes, the average price for that neighbourhood will fall not because house values have dropped but because the condominium units are having a negative effect on average prices.
The other commonly reported figure in the press is the change in sales volume calculated by comparing the current month’s sales to sales in the same month in the previous year.
