The way real estate data is presented is about to change on Vancouver Island.
Starting next month, Island home sales information will be given using an index similar to the format used by Statistics Canada to measure inflation.
Currently, raw home sales data and average real estate selling prices are presented at the end of each month, but that index has limited usefulness.
A sudden, unusual spike in sales in a specific price range can, and often does, happen in certain months, and the sale of several homes in the million-dollar range, or a surge in low-cost housing sales can skew the entire data set.
Larger urban areas such as Vancouver, Calgary, Toronto and Montreal have used the Home Price Index system for years.
The HPI is similar in form to the Consumer Price Index, which is based on a basket of goods, rather than an average of all goods sold each month.
The change was announced this week at the Vancouver Island Conference Centre.
"Averages and medians swing wildly from one month to the next," said Gregory Klump, Canadian Real Estate Association chief economist. "It's really dependent on the mix of sales from one month to the next. As a result of those wild swings those swings can be misinterpreted."
A hypothetical basket might contain a two-bedroom, 1,200-square-foot condo, a 2,000-sqarefoot, three-bedroom home and a five-bedroom executive home all in the same neighbourhood.
If one sells for $250,000, another for $350,000 and the third sells for $450,000 in June in Nanaimo, and similar properties sell for the same amount six months later, the HPI scale will show the market as flat. Even if average selling prices fluctuated wildly. "It takes the median of quantitative factors - the number of bedrooms and so forth - and qualitative factors, such as a fireplace," Klump said. "In that way you're always comparing apples to apples."
He said the HPI system predicted the price drop of the last recession before other indices.
The Vancouver Island Real Estate Board, and its Victoria counterpart, start using the HPI system in November.
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