During the brief housing correction in 2008, condo values fell by 5% , semi-detached homes declined by 3.9% and townhouses decreased by 4.4%. But what is surprising is that detached values plunged by whopping 25% at its worst. Specifically, the median detached price in the GTA was $300,200 in December of 2008 compared to $403,000 a year earlier.
You may ask why am I looking at the median price for detached homes and not the average price. The reason is simple. Between 1996 and June 2011, TREB published the median stats box for the various market segments. Reporting median prices was the standard until very recently. But since July 2011, TREB switched to publishing the average prices box for various market segments.
That makes you wonder what is their intent for such a switch? It is well known that the "median" statistic is more accurate in representing the market conditions compared to the "average". This is because average values can be easily skewed by outliers such as a sale of a home for $10,000,000 which is going to push the average price disproportionally up.
Anyhow, back to the detached home market in Toronto.
Did all free-standing homes lose 25% of their value in December of 2008? I don't think so! Is the 25% decrease in median prices a statistical artifact? That I don't know. However, what is probable is that the majority of detached homes sold that month were on the low end of a price curve, thus pushing the median price down. People simply refused to buy expensive properties such as detached dwellings.
In sum, when the shit hits the fan again in Toronto's housing market, don't be surprised if detached homes experience a severe correction just like the condo market!
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