Altus Group, CREA and the country’s real estate boards have just created Canada’s first truly national MLS Home Price Index. It’s a big deal and it’s important for all Realtors to know why.
Our hyper-connected, fast-paced online world has spun a new breed of buyers and sellers. They demand market data that is updated as it happens. This demand isn’t met by Realtors who use the average sale price produced at the end of each month by various associations.
The average can be heavily skewed by abnormally high or low sale prices that make the average appear higher or lower than what a client can expect when going to make an offer. Compound this with information that is a month old and your information is likely inaccurate. Month-old data that is affected by the “lie of averages” isn’t what our clients want. They want timely information that provides insights specific to the type and location of the property they want to buy or sell. The HPI does exactly this.
This secret data weapon was generated by Altus Group in partnership with CREA and the founding boards, with expansion to all other real estate boards and associations across Canada. Because of Altus Group’s partnership with the boards, the data behind the HPI is directly sourced from the boards and associations, making the data update immediately when homes are reported sold on any MLS system. This stands in contrast with other online housing data platforms that provide market information only after title has transferred.
Apart from the immediate provision of information afforded by the HPI, “it’s a powerful tool that enables Realtors to provide neighbourhood home price level and trends to deliver faster insights to their clients. It is a true national HPI powered by Realtors using our technology,” says Jason Lo, a vice president at Altus Group. “Using our proprietary hedonic modelling, machine learning and our AVM technology, the index analyzes all of the sales data from a board or association’s MLS system, applies a value to a ‘typical’ home for various types of dwellings for each submarket, and tracks the relative change in value over time on a national and real-time basis. An average sales price or platforms that rely on timed-lagged sold price data cannot achieve this.”
Creating this relevant market data tool was no easy feat. All organizations had to achieve national consensus and agreement from all stakeholders in order to ensure that the HPI was invaluable to all Canadian Realtors, investors, buyers and sellers. The work and consensus building that went into the HPI was important for the industry.
For Altus Group, it supports its mission “to deliver greater visibility and transparency to the housing market, which is critical in a competitive market and impacting drivers of policy changes, affordability and supply issues.”
It’s now up to Realtors to use this information to meet the needs of the new consumer. If they don’t, someone else will.