The MLS® Home Price Index Leading in Canadian Housing Market Analysis
As many REALTORS® know well, the MLS® Home Price Index (HPI) is one of the best tools to gauge home prices and trends in their local neighbourhoods.
What REALTORS® may not know, though, is how valuable the tool is to other important Canadian economic stakeholders.
Learn how a tool developed for REALTORS® is helping some of the most important economists in the country.
Quick refresh: What is the MLS® HPI?
Average or median prices can change a lot from one month to the next and paint an inaccurate or even unhelpful picture of price values and trends—especially to the untrained eye.
The MLS® HPI is based on the value home buyers assign to various housing attributes, which tend to evolve gradually over time. It therefore provides an “apples to apples” comparison of home prices across the entire country. It’s the most important data tool to help REALTORS® be able to provide their clients with insightful market data, helping them to make informed choices about their home.
Each month, the MLS® HPI uses more than 20 years of MLS® System data from boards and associations and sophisticated statistical models to define a “typical” home based on the features of homes that have been bought and sold. These benchmark homes are tracked across Canadian neighbourhoods and different types of houses.
Canadian stakeholders relying on the MLS® HPI
The MLS® HPI has been growing in popularity among key industry stakeholders.
Statistics Canada, since their March 2022 release, has been using the MLS® HPI as part of its Consumer Price Index (CPI) calculations—an important number to economists working across all sectors. The CPI incorporates the MLS® HPI as the source for resale housing prices into the mortgage interest cost model.
The Bank of Canada, aside from including MLS® HPI data in chart form in its publications such as the Monetary Policy Report, uses the data to understand how house price changes are potentially driven by demand or supply forces. They also look at how monetary policy impacts the demand-driven and supply-driven house price inflation.
In addition to its use in statistical research and publications, the MLS® HPI has also been thoroughly peer reviewed by leading experts from the public and private sector.
What does this all mean for REALTORS®?
Well, for one, it means that REALTORS® can be proud and confident that the MLS® HPI tool they rely on is widely recognized as the standard in Canadian housing market data. When used effectively, your clients are getting the same insights as the leading economists—a service level that REALTORS® should be proud of, and one more way that the Canadian Real Estate Association (CREA) has your back in creating powerful tools to help bolster our members’ careers.
