The MLS® Home Price Index (HPI) is the most advanced and accurate tool to gauge a neighbourhood’s price levels and trends. To ensure all data and benchmark attributes are up-to-date and remain relevant over time, the MLS® HPI undergoes a comprehensive review each year. The results can lead to changes in the available data and historical composite, or aggregate benchmark prices could be revised higher or lower.
During the process, historical composite and aggregate data is recalculated using a consistent set of neighbourhoods. Discontinued benchmark home prices are dropped from historical recalculations, while newly introduced benchmark home prices are added.
Introducing a neighbourhood into the MLS® HPI that has relatively expensive benchmark home prices can cause historical composite or aggregate benchmark prices to increase. On the other hand, discontinuing coverage of a neighbourhood with relatively expensive benchmark home prices can cause historical composite or aggregate benchmark prices to decrease.
Unlike average or median home prices, which can fluctuate from one month to the next and potentially paint an inaccurate or even unhelpful picture of price values and trends, the MLS® HPI is based on the value home buyers assign to various housing attributes, like the age of the home and number of bedrooms. The evaluation of these attributes tends to evolve gradually over time, so this review helps to create a more insightful analysis.
For more information about the MLS® HPI and its methodology, visit CREA.ca. If you’re not currently using the MLS® HPI, contact your board or association to find out how you can impress your clients with this tool today!
