CALGARY — The year-over-year value of homes in Calgary increased in January by 2.7 per cent but is trending downward in the short-term, according to a new price measurement tool introduced Monday by several major real estate boards across the country.
The new MLS Home Price Index was introduced by the Canadian Real Estate Association in partnership with Canada’s largest real estate boards — Vancouver, Fraser Valley, Calgary, Toronto and Montreal.
According to the Canadian Real Estate Association, although Calgary’s index is up from last year, it has dipped in the short-term. Calgary’s index is down 0.12 per cent from a month ago, down 0.30 per cent from three months ago and down 0.83 per cent from six months ago. It is also down 3.39 per cent from five years ago.
The index is up 3.32 per cent from three years ago.
In a news release, CREB said the new tool measures how typical properties are valued in the market rather than relying on average and median prices.
“In January, for example, the average price declined year-over-year, but only because more homes were sold in lower-price ranges compared to the previous year when more luxury home sales occurred,” said CREB.
In CREB’s monthly MLS data for January, single-family average sale prices were down 3.34 per cent to $438,683 and condo average prices dropped by 6.86 per cent to $268,526.
CREB said the new index is calculated using a “sophisticated statistical model” that estimates home prices based on their quantitative and qualitative features that are typical to that neighbourhood, such as square footage, number of rooms above the basement level, number of bathrooms and half-bathrooms, whether the property has a fireplace and/or finished basement, lot size or the age of the property, to name a few.
Bob Jablonski, CREB’s president, said the new index “can be used to not only determine pricing trends, but also to gain insight into the typical home in a specific market segment.”
Garth Turner, an author and well-known critic of the real estate industry, said he is concerned the index will be a “smoothing out of statistical data.”
“I’m a little concerned that it will remove from your view and mine monthly statistics, in other words raw monthly numbers . . . I’m just a little bit concerned that it will be easy to hide behind an index which is run through a filter and averaged over a period of time,” he said. “That will mask some of the really important changes in the market that I think are more important now than ever because we’ve reached a position where most people think the housing market is over-valued, inflated and very susceptible to shock.
“By smoothing out the numbers, it’s possible for the real estate community to modify the bubble aspect of the real estate market. It’s also possible for them to mask a decline. And it may send out the wrong signal to people who are looking to these numbers to know whether to make this giant purchase at this time or not.”
But Ann-Marie Lurie, CREB’s chief economist, said in a statement that the index is the best tool to determine true price trends in the market. She said the commonly-used average and median prices can be misleading as they are easily affected by the composition of what is sold.
Read more: http://www.calgaryherald.com/business/Calgary+home+prices+from+year/6108753/story.html#ixzz1ldUGedQ