Monday, 19 March 2012

Introducing the MLS® Home Price Index


What is it?  What can it do for me?  How does it work?  

The Toronto Real Estate Board (TREB), Canadian Real Estate Association (CREA) and four other major real estate boards across Canada have developed a new system to measure and provide clarity on home prices and home price growth: the MLS® Home Price Index (MLS® HPI).
What is it?

MLS® HPI allows you to see trends in home prices for a specific type of house in a given neighbourhood, that takes into account a home’s quantitative attributes (e.g. the number of rooms it has; square footage etc.) and qualitative attributes (e.g., whether it has a finished basement, a view etc.).
Combined with our Real Estate knowledge, experience, and skills, the MLS® HPI will allow you better understand these trends - and how they can affect the market value of your home.
Most importantly, it will help you approach one of life's most important decisions - buying or selling a home - with greater confidence.

What can it do for me?

MLS® HPI isn't designed to predict the value of an individual property. However, since it is based on MLS® listing content - a comprehensive and accurate source of real estate data in Canada - the MLS® HPI provides a more precise picture of home price trends in a given region, municipality, or neighbourhood.

It can help you by:

  • Putting accurate information in the hands of your Realtor, who can use it to help you get the right price, whether you're buying OR selling 
  • Helping you see price trends, so you can plan ahead 
  • Allowing you to compare home prices across the entire country if you're moving from one region to another 
How does it work? 

The MLS® HPI can help you gauge changes in housing prices over time, including changes in:

  • Overall home prices for the market as a whole
  • Prices for specific housing categories in a given area
  • or for the overall market
This information will help you easily determine the market value of a home.

Easy to calculate

The MLS® HPI tracks changes in home prices by comparing price levels at a point in time with price levels in a base (reference) period. The base period value is always 100.

For example, if the base period for single-family homes is 2005, and the MLS® HPI value for single-family homes in December 2011 is 149.1, you know that the value of single-family homes is up 49.1%, compared with 2005 (149.1 − 100 = 49.1%).