A new method for measuring trends in housing prices will be available beginning November 1st.
The MLS® HPI is the best and purest way of determining price trends in the housing market. It takes housing quality into account, such as housing category, location, number of rooms, living area and other features in a way that no other method of price tracking does.
The MLS® HPI measures the rate at which housing prices change over time taking into account the types of homes sold and their location. The index tracks the willingness to pay for various housing features whose values can differ from one sale to the next. As such, MLS® HPI provides a better measure of general price change for each category being tracked.
How does it work?
Each home that is sold has a unique set of features such as living area, number of bedrooms, bathrooms, lot size and location. The MLS® HPI model uses a sophisticated statistical analysis methodology to determine the current value for these attributes, and calculates how the value of the typical or "benchmark home" changes over time. As a result, price changes are not subject to being skewed by the composition of the property sold, the way that average or median prices can be. Indices and benchmark prices are maintained for each of our main residential property types and each of the geographic areas of our trading area, from region-wide right down to individual neighborhoods. In turn, this makes it possible to compare market price trends between areas.
Some of the 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