Home Price Index debuts in Greater Victoria today
Carla Wilson / Times Colonist

October 31, 2013 10:05 PM

The new standard for real estate statistics is expected to benefit buyers and sellers. 


A new way of analyzing and illustrating real estate sales and trends is being rolled out in Greater Victoria today.
The Home Price Index is designed to deliver a more accurate and reliable picture of housing prices by tracking prices
levels for a typical or “benchmark” home in a community.

Real estate watchers are used to seeing monthly statistics showing average and median prices in the region for
properties sold through the Victoria Real Estate Board’s Multiple Listing Service.

But the local real estate board has cautioned for years that averages are easily skewed depending on the value of
home sales. Last month, for example, 12 single-family houses sold for more than $1 million.

An average is calculated by adding up the prices and then dividing by the number of sales. A median is the mid-way
between the high and low prices. 

This system shows home prices based on features in a home, said David Corey, executive officer of the Victoria
board. A typical home will include quantitative features, such as the number of rooms and bathrooms, and its age, as
well as qualitative features such as proximity to amenities and renovations.

The Victoria board will continue releasing the old data table, listing average and median prices, for the next few
months so that people can compare the systems, said Maggie Kerr-Southin, board communications manager.
The index is already used by real estate boards in Calgary, Greater Vancouver, the Fraser Valley, Montreal, Toronto
and the Canadian Real Estate Association. Vancouver Island’s board (largely representing the area north of the
Malahat) will also be participating.

Cameron Muir, chief economist for the B.C. Real Estate Association, said the Home Price Index provides a “much
more accurate picture” than averages and median prices. The old system is easier to misread.
“Average prices are subject to a lot of volatility, or what we call skewing. Any given month, you can have a whole
bunch of luxury waterfront homes sell, and then the next month they don’t and it looks like prices have gone up and
then fallen.”  The statistical model extracts the attributes of a typical home in a community and then assigns values to that and creates a benchmark price out of that, he said.


Ronan O’Sullivan, a 20-year realtor with Remax Camosun, said the introduction of the Home Price Index is good for
both sellers and buyers. “This will enhance the way real estate agents approach pricing a home and how buyers
structure their offers by using the more detailed and accurate statistical information the [index] provides,” he said.
Monthly statistics providing average and median selling prices “were often misleading and did little to help establish
property values or market trend information,” said O’Sullivan. “Conventional wisdom in arriving at a value for a specific
property is to compare the property in question to recent sales and current competing listings in the immediate
neighbourhood. “The rationale for comparing neighbourhood-specific properties goes to the “location-location-location” concept.  Comparing properties in other areas without regard to the location differences could lead to incorrect estimates of value.”

The Home Price Index offers the real estate agent performing a home evaluation more precise neighbourhood
information, said O’Sullivan. It is updated monthly and also allows for accurate side-by-side neighbourhood trend
comparison by property type. It is also highly useful for agents acting for buyers in developing negotiating strategies
for offers, he added.
© Copyright 2013


October 29, 2013

Don't look now Mr. Flaherty - here's another shot in the arm for real estate

By Garry Marr

A London-based group is now predicting construction output, led by housing, is set to grow by about 4% over the next year, despite the fact the...

The Canadian real estate industry will get more good news today - not that it needs any more positive spin or Finance Minister Jim Flaherty even wants to hear it.

Canada won't interfere in housing market - for now: Flaherty1

The Canadian government has no plans for now to clamp down on the housing market even though prices are rising again, Finance Minister Jim Flaherty said on Monday, but he pledged to investigate whether the price uptick looks to be more than temporary.


But a London-based group is now predicting construction output, led by housing, is set to grow by about 4% over the next year, despite the fact the industry faces labour shortages and financing concerns.

"It's not stunning growth but it's solid growth. Over the year, based on this survey, the construction industry will underpin the economy in Canada," said Simon Rubinsohn, chief economist with the Royal Institute of Chartered Surveyors which interviewed dozens of senior managers in the largest construction firms in the country.

The news comes as Mr. Flaherty continues to keep a close watch on the Canadian housing industry which is showing signs of a recovery. The finance minister said he will be talking to developers about whether the housing sector needs more regulation as prices continue to rise in most markets and sales recover after a dismal 2012.


"I have no intention of interfering in the market for the time being," Mr. Flaherty told reporters5 on Monday, acknowledging the Bank of Canada is very restricted on what it can do to cool the market since it doesn't not want to raise interest rates for fear of impacting the overall economy.

The housing sector has shown renewed strength over the past two months, in part because statistics are being compared to a year ago when the market stalled. The Canadian Real Estate Association said this month that actual September sales were up 18.2% from a year ago while the average national sale price rose 8.8% during the same period.


Mr. Flaherty has already tightened mortgage rules four times, with one of the most restrictive measures being a lowering of amortization lengths from 40 years to 25 years. The shorter lengths increase monthly payments, allowing consumers to borrow less.


Economists who met with Mr. Flaherty encouraged him to meet with more people in the industry. "I do speak to people regularly in the business and I'm going to do more of it now because I want to ensure that this isn't just a temporary bubble," said the finance minister.


Based on the survey, the major concern out there for real estate is financing. "We try to get a sentiment and a quantitative view on what people think is going to happen and what is impeding growth," said Mr. Rubinsohn, noting financial constraints were the top issue for respondents. "Output is increasing, particularly driven by private housing, infrastructure and some commercial development."


Mr. Rubinsohn says the survey is "quite forward looking" because surveyors see many of the projects in the pipeline as they are involved in the early stages.


A shortage of labour continues to be an issue for the construction industry which ranked it as the second biggest issue after financial concerns, cited by more than half of respondents.

The group noted that British Columbia authorities are starting a recruitment drive in Ireland to attract construction workers to the province.


"Obviously they feel they need to look very far afield to attract construction workers," said Mr. Rubinsohn, noting they've headed to a region like Ireland where the construction industry is still "flat on its back."



October 22, 2013

B.C. housing rally expected to continue through 2014


Sales are forecasted to rise 6.3 per cent next year as economy improves

A rally in British Columbia's housing market is expected to extend through 2014 as the provincial economy gathers steam.

Sales on the Multiple Listing Service are on pace to reach 71,700 units in 2013, up 6 per cent from last year's sluggish showing, says the B.C. Real Estate Association.

With consumers concerned about the prospect of higher interest rates over the next year, many British Columbians are locking in mortgage preapprovals and shopping for homes, said Cameron Muir, the association's chief economist.

In July, 2012, the federal government reduced the maximum period for a government-insured mortgage to 25 years from 30 years, resulting in a dampening effect on house sales. Last year, there were 67,637 sales across British Columbia of single-family detached homes, condos and townhouses, or a decline of 11.8 per cent from 2011.

The average residential price for a B.C. resale property this year is now forecast to climb 4.3 per cent to $537,100. A year ago, the association originally predicted a 0.7-per-cent price increase for 2013, though it subsequently revised its estimate to a 3.3-per-cent hike as the province's housing industry healed from a rough 2012.

Mr. Muir forecasts that B.C. housing sales in 2014 will climb a further 6.3 per cent to 76,200 units while prices rise 2.1 per cent to $548,200. A stronger provincial economy is taking shape, including increased production of B.C. lumber due to a rebound in the U.S. housing market. Exports generally are in line to benefit next year from improved economies globally, especially in the United States and Japan.

The 15-year average for B.C. housing sales volume is above 79,000 annually, while the five-year average is 74,600. "We're seeing a sales recovery back to long-term averages," Mr. Muir said.

The real estate market in Greater Vancouver in particular has been strengthening this year, boosting statistics provincially. The association forecasts that 28,400 homes will change hands this year in Greater Vancouver, up 11.6 per cent from last year. An estimated 5,650 sales are predicted for the Victoria area in 2013, or a 3.5-per-cent hike from last year.

Mr. Muir sees the momentum continuing, projecting a sales jump of 8.8 per cent to 30,900 units in 2014 in Greater Vancouver and 4.3 per cent to 5,895 in the Victoria region.

Average resale prices for single-family detached homes, condos and townhouses are forecast to rise 4.8 per cent in Greater Vancouver this year and ascend a further 0.9 per cent to $772,000 next year. In the Fraser Valley, which includes the sprawling and less-expensive Vancouver suburb of Surrey, average prices are likely to increase 1.1 per cent this year and get another lift of 1.6 per cent to $497,000 in 2014, according to the association.

Average prices are forecast to edge upward in other provincial markets next year, too, including on Vancouver Island and the Chilliwack, Kamloops, Kootenay, Okanagan Mainline and B.C. Northern regions.

Last year, Ottawa eliminated government-backed insurance for homes above $1-million in a bid to discourage high consumer debt levels. So far in Greater Vancouver, buyers haven't been scared away from higher-end properties, with average single-family detached prices projected to advance 5 per cent this year and a further 1.7 per cent to $1,189,600 next year.

While Greater Vancouver's sales volume surged 64 per cent last month, that is compared with a subpar performance in September, 2012, Mr. Muir cautioned.

He added that housing demand will be bolstered by business investment and steady international migration. B.C. housing starts will slip 5 per cent this year, but new home construction is expected to increase 3.4 per cent next year to 27,000 units.


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