Statistics can be made to state whatever you want them too, as long as you have info to back you up.
For example, average house prices reported in Canada are derived from the MLS(R) system. It is not wholly accurate as private sales and new home sales are not included. But economists and the CMHC use the results as a major economic indicator.
Well, some other financial institutions are questioning its validity as the prime method of determining whether we're in a bad economy or not. The TD Bank Financial Group was first with their TD Home Price Index. It takes into account, for example, that BCs sales are down 50%. This improperly impacts the national percentage. How different does this make things? CREA says avaerage prices for major markets is down 10.9%. The TD HPI says 4.6%.
Others jumped on the band wagon too. National Bank Financial Group and Teranet have come up with another home price index which is based on "repeat sales methodology". They record public land registries in six major metropolitan centres of properties that have sold at least twice during the recording period. The result is published on the last Wednesday of each month on www.Houspriceindex.ca. It is used primarily to help the industry sell financial products. And for us in Hamilton, since our metropolitan area wasn't included, it should be used as only a back-up measurement.
Massive stabilization on the MLS(R) system has occured during the past four months and I think future indexes will be more accurate, regardless of methodology. But during that "reset" stage, it is best to consider other factors too. Such as demographics. There are more first-time buyers in the marketplace and since they have good credit and no time restraints, they are ideally set to move into the market aggressively. This alone, will drastically solidify statistics as they are set to become the largest market segment over the next ten years.
Robert J. Morrow is editor of www.HamiltonHomeReview.com, an online real estate magazine serving Greater Hamilton, Ontario. Click here for a FREE SUBSCRIPTION sent to your email monthly. Click here to receive new Hamilton area listings in your email daily.
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