The tool that you rely on for the most accurate measurement of home price data in Canada – including MLS® HPI Benchmark prices and the index itself – has just gotten better.
The methodology behind the MLS® Home Price Index – relied upon by dozens of Boards in Canada – was updated by CREA in May 2022 to ensure that it accurately reflects the most up-to-date house buying trends.
This means that any MLS® HPI data in your May 2022 Stats Package – Benchmark prices, indices and graphs – are now based on models that reflect characteristics or attributes of homes purchased in the last five years.
It also means that any Benchmark prices or indices contained in old PDFs of FVREB Stats Packages – literally older than May 2022 – are out of date.
What’s changed?
We have not only updated the current and historical HPI data in the May 2022 Stats Package, we’ve also updated the MLS® HPI prices in our FVREB Stats Centre going back to January 2005 and posted a new MLS® HPI Benchmark Attribute Report on REALTOR Link®.
The MLS® HPI is typically recalibrated annually, which results in slight adjustments to historical benchmark prices and indices across all areas, sub-areas and property types going back to January 2005, the starting point of our current index.
When working with your clients, we recommend always using the most current Stats Package and if you need to pull historical Benchmark prices, head to the FVREB Stats Centre or use our MLS® HPI Tool (go to REALTOR Link® > under Market Data & Stats > MLS® Home Price Index).
How can I tell?
You won’t notice any changes to the MLS® HPI in our May 2022 package. The MLS® HPI benchmark prices are simply ‘up to date.’ Where you would notice the adjustments is when you’re comparing, for example, a benchmark price from an old stats package with the same historical price as shown in the FVREB Stats Centre.
In our May 2020 Statistics Package, the Benchmark price for an apartment in Langley was $402,600. Our FVREB Stats Centre – now updated with the revised historical MLS® HPI Prices shows the price was $430,600.
Was our Stats Package from May 2020 incorrect? No, the price in the May 2020 package was just a snapshot in time and reflected previous Benchmark Attributes.
How do they update the MLS® HPI?
This year, instead of asking ‘what would a typical home from 15 years ago be valued at today?’, the team asked, ‘what is a modern typical home worth today and 15 years ago? ‘All benchmark price data will recalculate with the most up-to-date housing attributes. This new methodology examines benchmark attribute data that was collected from the previous five years.
Here’s what they did for the May 2022 recalibration:
- Update the housing attributes to reflect what a typical home looks like in a community
- The MLS® HPI historical prices (back to 2005) have been updated to reflect the revised methodology (to allow for an apples-to-apples comparison)
If you want to understand what a ‘typical home’ looks like in your area, the most recent MLS® HPI Benchmark Attribute is now available on REALTOR Link®. The ‘typical home’ in some neighbourhoods has changed quite a bit, while some have undergone few changes.
How do the Benchmark attributes affect the Benchmark prices?
So, you’re probably wondering how Benchmark Attributes or characteristics of ‘typical’ homes that sell in a given area affect Benchmark prices?
Well, here is an example, the previous Benchmark Apartment (or most typical apartment) in Langley was a 944 sq ft apartment with two bedrooms that was built in 1998. After the May 2022 revision, the Benchmark apartment in Langley is now a 900 sq ft apartment with two bedrooms that was built in 2010.
You could imagine the price difference between an apartment built in 1998 and an apartment built in 2010. As a result, the price of a typical Langley apartment has increased due to changing attributes.
How could this affect me and how I inform my clients?
The changes most matter if you have created personal graphs in excel reflecting historical benchmark prices for a given area or sub-area. You will want to re-extract your data, which is easy to do via the Share option on the Stats Centre: CSV – grab the raw data.
It is important to note that if you are comparing the MLS® HPI between the most current package to the previous one, you are not doing an ‘apples-to-apples’ comparison. You may be comparing a 2-bed, 700 sq ft apartment to a 3-bed, 1000 sq ft apartment, two very different apartments.
In this case, you should go to the FVREB Stats Centre to get the most ‘current’ Benchmark prices. This way you’ll be comparing ‘apples-to-apples’ rather than ‘oranges-to-apples’.
For more information on the MLS® HPI, including how it works and what it can do for your business, visit CREA’s dedicated page on REALTOR Link®.