Initially, that new tool will see limited distribution, with only five Canadian markets – Toronto, Montreal, Calgary, Vancouver and the Fraser Valley – contributing. Another 16 major centres should come on stream by the end of 2013. Regional data is also used to come up with aggregate readings, initially capturing just under half of the country’s sales activity.
By comparing sale prices for particular categories of housing to their 2005 benchmarks, said Klump, the index sets itself apart in its ability to drill down beyond the average and median prices that CREA will continue to report for individual markets.
Sorting is based on qualitative data – a property’s proximity to shopping, schools and key urban attractions – as well as quantitative data -- including the number of bedrooms and bathrooms and the age of a property.
That means the index should be comparing apples to apples and not oranges, avoiding lumping multimillion-dollar West Vancouver houses in with small condos in Chilliwack.
“The MLS HPI is the best and purest way of determining price trends in the housing market,” according to CREA.
For real estate investors, the index gives them a better way of monitoring price ebbs and flows in their own particular market segments -- information considered key in determining when to change up an existing portfolio.
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The MLS® HPI “will not be skewed by what people are willing to pay for certain features,” Gregory Klump, chief economist for the Canadian Real Estate Association, told reporters at a Monday teleconference detailing the index.