Home prices edge higher in January

OTTAWA, Feb. 6, 2012 /CNW/ - The MLS® Home Price Index rebounded in January following monthly declines in each of the two previous months, according to statistics released today by The Canadian Real Estate Association (CREA).

The MLS® HPI is designed to be a reliable, consistent, detailed, and timely way of gauging home price trends. It is calculated each month and covers five major housing markets: Greater Vancouver, Fraser Valley, Calgary, Greater Toronto, and Greater Montreal, with additional markets to come. It is generated and published under agreements between The Canadian Real Estate Association, the five boards listed above, and Altus Group.

Highlights:

  • The aggregate composite MLS® Home Price Index rose 0.27% on a month-over-month basis in January 2012 after having declined by a 0.20% dip in December and by 0.07% in November.
  • The rebound was led by increases in Montreal (0.68%), Toronto (0.28%) and Vancouver (0.06%), which more than offset monthly declines in the Fraser Valley (-0.14%) and Calgary (-0.12%).
  • Prices were up on a month-over-month basis for 1- and 2-storey single family homes, rising 0.47% and 0.53% respectively.
  • This increase more than offset slightly lower prices for townhouse/row units (-0.41%), and apartment units (-0.20%).
  • The index remains up from year-ago levels in all five of the markets tracked, led by Toronto (7.6%).
  • It also remains above year-ago levels in all housing categories tracked, led by 2-storey single family homes (6.7%).

The MLS® Home Price Index rose 0.27 per cent in January 2012 compared to the previous month. Gains in Montreal, Toronto and Vancouver more than offset slightly softer readings in the Fraser Valley and Calgary.

The index remains 5.2 per cent above levels for January 2011. Led by Toronto (7.6%), all five of the markets tracked posted year-over-year increases. The index was also up from year-ago levels in all housing categories, led by two-storey single family homes (6.7%).

"While home prices remain up compared to one year ago, price growth from one month to the next has been slowing, causing year-over-year gains to shrink, and prices are generally expected to continue to stabilize this year," said Gary Morse, CREA President. "That said, many parts of the country could continue to see gains, while others may see home prices soften. All real estate is local, so talk to your local REALTOR® to better understand how price trends in your neighbourhood are shaping up."

In recent months, the index for single family homes has generally held steady while trending lower for townhouse and apartment units. This trend continued to play out in January 2012, with monthly declines reported for townhouse/row units (-0.41%) and apartment units (0.20%). By contrast, 1-storey single family homes posted a 0.47 per cent gain, while 2-storey single family home values gained 0.53 per cent.

The MLS® HPI - A better way to gauge home prices

"The introduction of the MLS® HPI will provide clients and REALTORS® a more timely and accurate gauge of home values in a number of major markets across Canada," said Morse.

In each of the five markets included in the index, MLS® HPI data are available for: single family homes, which are further split into 1-storey, and 2-storey single family homes; townhouse/row units; and apartment units. Data for these housing types are also available along detailed neighbourhood lines (areas and sub-areas) for each market tracked by the index.

Indices for each of these housing types are used to calculate a Composite (i.e. overall) MLS® HPI in each market tracked by the index, which reflects the general price trend in each market. MLS® HPI data for each market are also used to calculate Aggregate MLS® HPI data for each housing type tracked by the index. The data are also used to calculate an Aggregate Composite MLS® HPI index, which gauges general (overall) price trends for the collection of Metropolitan markets tracked by the index.

The MLS® HPI is calculated using a hybrid approach that merges Repeat-Sales and Hedonic Price methodologies, and reflects contributions made by various quantitative and qualitative housing features toward the home price, including but not limited to:

  • Number of rooms above the basement level
  • Number of bathrooms & half-bathrooms
  • Square footage for main living & basement areas
  • Whether it has a fireplace and/or finished basement
  • Lot size
  • The age of the property
  • Parking
  • How the home is heated
  • Foundation, flooring, siding & roofing types
  • Whether the property has waterfront or panoramic view
  • Whether the property has been sold previously (newly constructed and previously unsold, or repeat sale)
  • Proximity to shopping, schools, hospitals, police stations, churches, sports centres, golf courses, parks, and transportation (including the train station, railways, and airports)

"Changes in average and median home prices are open to misinterpretation, since they can swing dramatically based changes in the mix of home sales," said Gregory Klump, CREA's Chief Economist.

"The MLS® HPI overcomes this shortcoming, and does a better job of tracking Canadian home price trends than any other measure."

"The Repeat-Sales approach for tracking home price trends has other limitations," said Klump. "Because it tracks only homes that have been sold at least twice, useful information is omitted, and it may be incapable of reliably tracking home prices for different neighbourhoods within a housing market. The Repeat-Sales approach may also take longer to produce home price indices due to data collection and availability considerations. But most importantly, that approach assumes that every home being tracked remains constant over time, which is unrealistic since Canadians spend a lot of money on home renovation each year."

"Corresponding MLS® HPI Benchmark prices meet longstanding needs for a way of gauging home price changes while keeping quality constant. They are also the most current and make it possible to more quickly identify turning points for home price trends," he added.

About the MLS® Home Price Index

The MLS® HPI is generated and published under agreements between The Canadian Real Estate Association, Greater Vancouver Real Estate Board, Fraser Valley Real Estate Board, Calgary Real Estate Board, Toronto Real Estate Board, Greater Montreal Real Estate Board, and Altus Group.

The MLS® HPI model was developed by a design team at Altus Group that includes Professor François Des Rosiers, the 2011 recipient of the International Real Estate Society Achievement Award. He has been teaching Urban and Real Estate Management since 1976 within the Faculty of Business Administration of Laval University in Quebec City, Canada.

Altus Group leads the global real estate industry in delivering data and key information about an organization's assets, generating a wealth of knowledge and insight. With a staff of over 1,700, Altus has a network of over 60 offices in 14 countries worldwide, including Canada, UK, Australia, Asia and the United States. Altus operates five interrelated Business units, bringing years of expertise together into one comprehensive platform: Research, Valuation and Advisory; Cost Consulting and Project Management; Realty Tax Consulting, Geomatics and ARGUS Software. Altus' clients include banks, financial institutions, governments, pension funds, asset and fund managers, developers and landlords and companies engaged in the oil and gas industry.

For additional information, including interactive tables, methodology and partner contact information go to: www.homepriceindex.ca

MLS® is a co-operative marketing system used only by Canada's real estate Boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada's largest single-industry trade associations, representing more than 100,000 REALTORS® working through more than 100 real estate Boards and Associations.

SOURCE Canadian Real Estate Association

For further information:

Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460
E-mail: pleduc@crea.ca


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