REALTORs in the CRD now have additional data to help our clients in their Residential real estate ventures.
Released in the Fall of 2013, the Home Price Index (HPI) has been developed with complex algorythms using MLS data, dating back to 2005.
When we talk about housing prices, we often refer to trends in average and median sale prices. These measures are commonly used as they are easily understood and data is readily available. However, averages and medians have their issues when attempting to use them to determine trends:
- Data can be skewed by "outliers" (unique properties, or very high or low value compared to others)
- All homes are treated as equal
- Home "composition" is not taken into consideration
The HPI provides us a "Constant Quality Price Index" and was introduced to provide a better measurement of price and price trends for residential properties; and to compare trends in different markets. For instance, a 2-storey home in Oak Bay-South may have a different HPI than a 1-storey home in the same area; and would be different than a 2-storey home in Oak Bay-Henderson.
Some advantages of the MLS HPI include:
- Understanding current market conditions and true price trends
- Estimating current market value or selling price of a typical home
- Tracking typical asset price changes
- Comparing characteristics and price trends in different markets
While the HPI data isn't intended to replace REALTORs current tools, expertise and conversations, it does COMPLIMENT them. And in my opinion, any data that helps our clients determine the market value of their home (or future home) is worth understanding and discussing.
If you'd like to know a bit more about how the HPI can assist in determining YOUR home's market value, contact me at Terry@ThisIsTLC.com or 250.384.8124.