BC Business
New Home Price Index | BCBusinessThe Real Estate Board of Greater Vancouver, along with several other boards across Canada, rolled out a new home price index that compiles more in-depth data for homeowners.
A new pricing index allows homebuyers to compare prices across major markets and more accurately price properties for sale. My addiction started off innocently enough. The review of a couple of tables here and there quickly morphed into creating my own neighbourhood sales spreadsheets. Then, one day I was reviewing the economic updates I subscribed to, and found myself buying tickets just to hear financial analyst Michael Campbell speak.
My addiction started off innocently enough. The review of a couple of tables here and there quickly morphed into creating my own neighbourhood sales spreadsheets. Then, one day I was reviewing the economic updates I subscribed to, and found myself buying tickets just to hear financial analyst Michael Campbell speak.
I can’t help myself. I want to know exactly what’s going on with markets and prices. I’ve officially become a stats geek. You may want to join the stats geek club too, especially when it comes to real estate.
The Real Estate Board of Greater Vancouver (REBGV) and the Fraser Valley Real Estate Board (FVREB) have produced data on their home sales, new listings and prices since the mid-1990s through their MLSLink Housing Pricing Index (HPI).
The HPI measures home price trends regionally over time for many property types. If you think it sounds like the Consumer Price Index, you’re right. It’s the same premise. It was, and still is, the most accurate indicator of housing price trends. But the HPI wasn’t usable outside the Lower Mainland because no other board in Canada had a similar measurement.
But recently, in conjunction with the Canadian Real Estate Association (CREA) and three other boards, FVREB and REBGV just launched a brand new MLS HPI. Why should you care? For those of you who move cross country, you can get an idea of what your buying dollar will get you in another area of Canada. The index does the same thing as the old one, but offers better, more current data and the ability to compare markets nationally. Now we can see how the Fraser Valley housing market has performed compared to Toronto, Calgary or Montreal.
These changes can make a big difference in the value (or lack thereof) in your home. The new MLS HPI creates truly hyper-local pricing. For example, under the old index, there was one area in Langley called “Murrayville/Willoughby/Brookswood.” The benchmark price, or the price for the “typical” home, in that combined area was $516,604. If you live in Langley, you know the three areas are very different. Now, under the new MLS® HPI for January 2012, each of those subareas has its own benchmark price: Murrayville is $621,100, Willoughby Heights rings in at $582,600 and Brookswood is at $507,200. That’s going to be a huge distinction in pricing a property accurately for sale.
Why is the the MLS HPI considered so accurate? It’s based on both qualitative (is the house near a park or shopping centre?) and quantitative data (square footage, number of rooms). Where the house is located is a portion of the valuation, but so is an extensive list of possible home attributes – view, fireplace, garage, basement, etc. The initial MLS HPI offering covers the big five real estate boards in Canada, which represent about 40-50 per cent of the country’s housing market. It’s expected that the final two phases of the rollout will see 80 per cent of Canada’s housing market included in the index by the end of 2013.
So to answer the question, “Will the new MLS HPI affect house prices in my neighbourhood?” As usual in real estate, the answer is “quite possibly”. If your neighbourhood was under-represented in the old HPI based on location or development in nearby subdivisions, it’s captured now. Another place you may see the reflection of the HPI’s detailed valuation is on your assessment for next year.
What this new index does is provide a more accurate way for a realtor to price your home. And hey, don’t you want to know what your house is really worth? I do, but again, I’m a stats geek.