Over the past 5 weeks we've seen the average price of condos drop from $230k to $208k. That's a pretty significant drop over a 5 week period, so a reader asked - "what's going on with condos?"
There are a number of answers to that question... first of all, when you look at the chart tracking the average price trends for condos and single family homes, you can see there are much greater fluctuations in average condo prices than single family home prices. The simple explanation for that is that there are more sales of single family homes in Edmonton, which means more data to work with, which means more reliable analysis of the data.
When you add in the fact that the number of condo sales is very low for the past month or so, you get even less reliable data.
I took it a step further though... I have tabulated the number of sales of condos in different prices ranges for the last 30 days, as well as 1 month with a high average price (August), one with a low average price (October) and 2 months with average prices somewhere in the middle (November and June).
In the past 30 days there have only been 172 total condo sales, 15 of which were under $100,000. When you look at June, there were 415 total sales, 17 of which were under $100,000. Sales on the bottom end of the price spectrum made up 9% of total sales in the past 30 days, and only 4% of sales in June. Here is how it all breaks down:
Condo Sales Breakdown
You can also see that sales over $400k made up only 3% of the past 30 days, VS 6% of sales in October. There are all kinds of inferences and deductions you can make from the above data, but the most important thing to keep in mind is that I post the averages so we can follow the overall trend, not get caught up in weekly fluctuations.
UPDATE:
I added a polynomial trend line to the average prices over the past year and its quite interesting. Even though the fluctuations in pricing for condos are greater on the short term, over the course of the year the fluctuation in pricing is greater for single family homes. The trend line only moves $10k for condos, but for single family homes the spread is greater - about $30k. So it would appear that seasonality has a greater affect on single family home prices than condo prices. Food for thought for sure...
At what number of sales do the stats become “less reliable” and at what number do they become “more reliable”? Sounds to me that you are just guessing that the condo levels are statistically less sound than houses.
Note that an average on its own doesn’t have the notion of reliability. The mean is simply the sum of all the sale prices divided by the number of sales – the concept of this number being reliable doesn’t make sense. The average is the average.
Now, if you want to use the current average to gauge whether or not prices are too high or too low or where they might be going then that is a whole different matter. The concept of reliability then becomes the question of how reliable a given statistic (such as the median or mean) would be if used to predict whatever it is you are trying to measure.
So the question becomes: what measurement are you trying to predict by using the average sale price?
‘Average’ and ‘mean’ are different things.
True, but in this case they both mean the same thing… the total of the values divided by the number of values.
Assuming that the average price of a condo is something a that is significant…. then the way you would measure reliability would be a standard error calculations, right? Standard error is a measure of how well we _really_ know the mean. Basically when you report standard error, you’re saying “We’ve given you a number for the average, but realistically, the average probably isn’t exactly that, it likely falls within this range”
You find standard error by calculating the standard deviation, and then dividing by the square root of of the number of samples that you have (well the number of sample minus 1, but the square root of 171 and the square root of 172 are both 13 and a bit)
Standard deviation is a measure of how much each individual data point deviates from the mean little more complicated to calculate but excel will do it for you (or you can look up how to do it)
So, I made some gross assumptions about the table printed above (I assumed that the sale price for each condo in a range was the middle of the range, and that the sale price for the low end was 65k, and the high end was 400k, and did an estimate of the standard error for each month. They were Dec = 6.3k , Nov = 5.3K, Oct = 5.5 K, Aug = 4.1K, June = 3.9K.
Looking at the standard error from the selected, it tells me that a small sample size is not sufficient to account for a large decline in mean price, even though it’s true to that for a smaller sample size.
All of this assumes, of course that tracking the mean condo price predicts something. I agree with Terry, what are we trying to predict with this data?
Now that’s the kind of talk I haven’t heard since University!
I’m not trying to predict anything, I’m just trying to show where we are now compared to the past. We know that there is a seasonality to the real estate market – with very few exceptions, every year prices and sales rise for the first half of the year and fall for the second half.
The more data you have, the better. Just look at the chart, you should be able to see the fluctuations in condo prices are much larger on a weekly basis.
Thank you!!
& Happy Friday
It’s not a big stretch for there to be more condos under $100,000 at the same time the average prices are trending down. The question remains whether we can blame lower average prices on a temporary increase in low-priced condos or whether people are just being more careful with taking on even more debt. Only time will tell. If something like the Case-Shiller Index (if one were built for Edmonton homes or condos) would help sort this out.
You are erroneously comparing $10K to $30K when you should be comparing the fluctuation in price measured in percentages.
You may feel it’s erroneous, but buyers are concerned with $’s not %’s.
Since condos may soften a bit in the coming months, I may very well look towards purchasing one as my employer will return me to Edmonton – as my counterpart there will retire. Are there good condos within Windermere? I hear to not touch any Terwillergar condo- all wood structures. Windermere sounds to be a great location for me. Any issues?
For the most part, if you want concrete construction you have to look at high rises closer to the centre of the city. There are a few concrete buildings on the outskirts like Terra Sol Court , and Century Park.
Thanks for the info. However are there any steel structures in Windermere for condos? Are there condos at all?
I would prefer to relocate closer to the technology park (south common area) than to live close to downtown…
There is a new concrete/steel condo building going up in Windermere, Windermere Waters. Website here: http://www.windermerewaters.com/ I am not sure when it is supposed to be completed, but the frame looks to be largely complete.
Thank you. I am appreciative.
There is also a concrete condo building in Sherwood Park, the Palisades building. Very nice, well maintained building
All very complicated. But thanks!
Good data as always, just like stat critics
My guestimate is there are lots of lower end condos coming on at start of selling season that do not reflect the year selling trend. Some low end investors are wanting out. Hope with labour growth the huge stock of condos should thin out. USA job growth, oil prices and my Ouija board say so.
Very interesting stats, what a huge difference compared to Toronto market!
Edmonton Expat,
I have a condo south of Terwilligar Drive and it is circa 2005 – steel and concrete construction. Just FYI
Just wanted to say THANKs for this blog – this is increasing my knowledge when I try to sell this spring with respect to the condo market and what I have to deal with.