Okay, it’s actually an acronym for Home Price Index, but it does make me happy!
The Calgary Real Estate Board has partnered with the Vancouver, Fraser Valley, Toronto and Montreal boards to develop a new statistical analysis tool that reflects changes in market prices more accurately than the average or median price ever could. This method has been praised by Stats Canada, the Bank of Canada and Canada Mortgage and Housing Corp as the best method yet developed to watch market trends.
This tool is an extra benefit of working with a realtor as we can now monitor both specific neighbourhood trends and city-wide trends more closely than ever. This can be beneficial for buyers when deciding which areas or types of homes to purchase as well as for sellers when pricing their home.
An analysis firm “scrubs” the market data that comes in from us realtors every month to clean up any inconsistencies (e.g. data input errors) and to classify properties into much more specific categories, taking into account such attributes as parking, finished basements, proximity to amenities, style of home and more. These attributes are given different weighting and then a well-designed formula is used to determine what the real pricing trend is for that month. This eliminates the skewing of numbers that can happen to average and median prices when certain price ranges have more sales activity than others.
The Home Price Index (HPI) uses January 2005 as the base month, giving it a value of 100. This is true across all the real estate boards involved in Canada. All subsequent months are compared to January ’05 and given a value based on the calculations mentioned above. So if the HPI for a month is 165, that means prices have increased by 65% over January ’05.
We also have the ability to break down the price index for a specific community or type of property. In the past, when trying to do this, it was hard to get accurate numbers since a small sample group is greatly affected by each specific sale.
Another new stat available to us is the Benchmark Price for each neighbourhood and property type (single family, apartment and townhome). There is a list of attributes for the prototypical property in that category and a price is given to that typical property. This can help sellers to evaluate their home’s features compared with the benchmark property and determine their own current market value.
In future blogs about Calgary real estate statistics, I will be referencing the HPI and look forward to using it to help you achieve your goals, armed with the most accurate figures. If you would like any specific market data or have any questions about the HPI and Benchmark Price, please email me at [email protected] – thanks!