The new MLS® Home Price Index: What’s new, what’s different?
The new MLS® Home Price Index: What’s new, what’s different?
As announced in December, a new national home price index will launch in February. This index will replace the MLS®Link Housing Price Index, which has been used by Greater Vancouver and Fraser Valley REALTORS® since the mid 1990s.
The new index was developed by five of Canada’s largest real estate boards – Greater Vancouver, Fraser Valley, Calgary, Toronto and Montreal – in partnership with the Canadian Real Estate Association and will be called the MLS® Home Price Index (MLS® HPI).
The six partners contracted with Altus Group to develop this new tool which, similar to the previous index, will allow housing price trends to be traced over time for different areas within participating board markets and for different property types. The MLS® HPI will also allow for comparisons between local and national markets.
Our current HPI – launched in 1995 in Fraser Valley and 1996 in Greater Vancouver – is widely recognized as providing the most accurate indication of housing price trends in our market, but it’s not usable outside of the Lower Mainland because no other market has comparable data.
“The MLS® HPI is a national collaboration intended to further position REALTORS® and the industry as the most credible and reliable source of real estate data in the country,” Rosario Setticasi, Board president said.
What will change?
The MLS® HPI will replace our existing MLS®Link Housing Price Index. MLS® HPI statistics should not be compared with previous MLS®Link HPI statistics. There will be a few notable changes to the index in the Greater Vancouver market.
Re-indexing
All indexes have a common base. The new MLS® HPI will be indexed to equal 100 in January 2005. The previous MLS®Link HPI was indexed to 2001. Sales prior to 2005 will not be considered in the MLS® HPI.
HPI values track relative price levels by comparing current prices to price levels in a base (reference) period. Because the base period is always 100, REALTORS® can quickly infer the extent to which prices have changed relative to the base period.
For example, if the MLS® HPI value for apartment units in September 2011 was 105.1, this indicates that apartment units in September 2011 had increased 5.1 per cent compared to 2005.
Property types
The MLS® HPI will provide benchmark price trend data for the three main property types: detached, attached, and apartment.
An expanded set of property categories will also be available to members, including one-storey and two-storey homes. A composite category has also been created to track residential activity across all property types in different areas within the region.
Areas
New property markets have been added to increase the scope of the HPI. Some HPI markets have also been redefined to produce more complete data.
Updating the “benchmark” home attributes
An HPI measures how home prices change over time and provides benchmark prices of homes with “typical” characteristics in a given area. It takes into consideration what averages and medians do not – items such as lot size, age, number of rooms, etc. The most commonly traded set of these attributes makes up the typical or ‘benchmark’ house. Prices paid for homes with these attributes determine benchmark home prices.
Similar to the MLS®Link HPI, MLS® HPI benchmark prices will represent the price of a typical property within a given area or sub-area. The typical or benchmark home attributes for the area and sub-areas within the Board have been updated and will be reflected in the MLS® HPI.
More detailed information on the new MLS® HPI will be made available on www.realtorlink.ca in the coming weeks.
Source: Realtorlink & Real Estate Board of Greater Vancouver