Really Knowing the Housing Market: House Price Indices and You!

In the first part of our 2 part series, “Really Knowing the Housing Market” we discussed what an Automated Valuation Model (AVM) is, types of AVMs, how lenders use these types of AVMs and how to drill down to the micro aspects of real estate values at the level of a property or neighbourhood. In this blog, we will dive deeper into house price indices and how you can know what is happening in the housing market at the macro level.

You likely often see in the news reports about what’s happening in the Canadian real estate market. These report gains and losses in the housing market, expressed as a percentage. This number is usually obtained from known-credible providers of house price indices.

House price indices are indexes that measure the price changes of residential real estate. The numbers produced in the house price indices will vary slightly depending on the data source. This is because different producers of house price indices get their data from different places.

Here are some of the more commonly known house price indices including where there data comes from:

• Teranet National Bank House Price Index – Data comes from property records of public land registries. Where sale price is available, Ontario data is updated regularly and directly from the Province of Ontario's Land Registry Information System (POLARIS) which contains some of the most current and accurate land information available. This product is marketed to and widely used by lenders.

•  MLS Home Price Index – Data comes from the MLS and this index produces home price data on particular homes and neighbourhoods. This is currently marketed as a product for the consumer to use to assess if their property has increased in value.

• Brookfield RPS House Price Index – Brookfield is best known as an appraisal management company, and you can leverage their access to appraisal data to support the development of their house price index

The type of house price index you turn to will depend on your personal needs and how you feel about where the data is coming from and how it is calculated – in terms of the accuracy of the result.

House price indices can help you be more competitive because they can help you to see shifts in the market based on trends and plan accordingly. Using house price indices and AVMs together helps to position you as better informed about everything you need to know about the Canadian housing market.

For more about house price indices and their value please contact Teranet today by calling 1.855.787.8439.