On September 8, The Record ran a story with the following headline: “Cambridge Condos See Average Prices Jump $84,000 in a Month.”
If you read this as a local condo owner — that the average condo sale price had risen to a whopping $598,577! — you likely jumped for joy as if you had won Lotto 6/49. On the other hand, if you’re thinking about buying a condo, you probably weren’t as enthused.
The funny thing with data: depending on how you segment, define and present it, it can tell two completely different stories.
(Spoiler alert: this is one of those situations.)
Let’s take a closer look at what really happened with Cambridge condos in August.
How Many Condos Were Sold?
For data to be statistically significant, more is often better. That’s why we rely on long-term trends and proven market drivers (e.g. supply and demand levels) to understand where the market is headed.
In this case, of the 176 homes sold in Cambridge in August, only 30 were condos (which, to be fair, was highlighted in the aforementioned article). This is a small sample size ripe for anomalies and, alone, warranting a deeper dive into the data.
What Kind of Condos Were Sold?
When you think “condo,” you probably think of high-rises like Gaslight District, Young Condos, etc. Those are called apartment-style condos.
But, really, a “condo” can be any property type — a townhouse, apartment, single-detached, etc. — where you own the unit and share common elements. This article clarifies the legalese.
Again, segmentation, definitions, and presentation are everything. Here’s why:
In August, 20 of the 30 condos sold in Cambridge were TOWNHOME-style condos — many of which were 2-3 bedrooms, 2-3 bathrooms, and upward of 1,900+ square feet.
Only 10 were APARTMENT-style condos.
The 20 townhome-style condos sold for an average of nearly $665,000.
As for the 10 apartment-style condos: they sold for an average price of $466,050. That’s a far cry from nearly $600,000 which many, from reading the article where no distinction was made, could have assumed applied only to apartment-style condos.
But, did prices jump $84,000?
Overall, including all condo property types — technically, yes. That said, here’s the data for apartment-style condos:
In July, 16 apartment-style condos were sold in Cambridge for an average price of $455,519.
This means apartment-style condo prices rose by 2.3%. Not 16.3%.
Here are the reasons why the average sale price of all condos (combined) rose so much last month:
- Sales volume was low (again, ripe for anomalies)
- A higher proportion of townhome-style condos (which, on average, sell for more) were sold in August compared to July (67% vs 54%, respectively)
- Two of the townhomes sold were uncharacteristically high-end, selling between $900,000 to $1.2 million (and there are your anomalies!)
When the data is properly segmented, it’s clear that Cambridge condos — at least the way most people think of them: apartment-style — are not worth an average of $598,577 and they didn’t jump $84,000. Not even close.
“Smell-Test Shortcut”
You don’t have the time nor the data access required to dig deep into the numbers each month.
But, when you see shocking headlines and big stats like the ones recently reported, it’s helpful to quickly check out the data from neighbouring markets.
As we’ve discussed in previous articles, home prices have moved more or less in unison across Southern Ontario over the past five years and beyond. So, in this case, you would want to look at the Kitchener-Waterloo stats to see if everything adds up.
According to KWAR, in August, the average sale price of apartment-style condos in Kitchener-Waterloo rose 3.7% to $445,280. When you compare this to the Cambridge apartment-style condo data (up 2.3% to $466,050), you can see the alignment you’d expect.
Takeaways
The point of this article is to create clarity, ease some minds, and highlight the importance of going beyond the headline and seeking clarification when something seems too good (or bad) to be true.
Really, this applies to anything you read. Data — as we’ve just seen — can tell two completely different stories depending on how it is segmented, defined, and presented.
