Most properties sold in Greater Victoria and the Southern Gulf Islands are listed and sold on the Victoria Real Estate Board's Multiple Listing Service® (MLS®) System.
To analyze sale price trends in the Greater Victoria housing market, the VREB has moved away from reporting changes in average and median sale prices. In its place, we now analyse trends using a system called the MLS® Home Price Index (MLS® HPI).
At the heart of the MLS® HPI is the concept of the benchmark home, a notional home that includes the most common attributes of typical homes in a given area. By analyzing ten years of VREB MLS® sales data, benchmark homes have been defined in the single family, townhouse and condominium apartment categories for individual neighbourhoods, regions and the Greater Victoria area as a whole. The MLS® HPI model then uses a sophisticated statistical analysis methodology to determine values for benchmark home attributes in order to arrive at a benchmark price for each of our benchmark homes.
MLS® HPI has computed historic monthly benchmark prices for each benchmark home back to January 2005. Moving forward, VREB MLS® sales data is used to compute new benchmark prices each month. In addition to being able to report on changes in benchmark prices over time, MLS® HPI also maintains a running index of the percentage change in benchmark prices from our January 2005 starting point.
By using the MLS® HPI benchmark prices and index values to report on market trends, we overcome the deficiencies inherent in a dependence on average and median sale prices, which are based on the particular mix of homes that sold in a given month. This is because MLS® HPI measures changes in benchmark prices of the same benchmark homes, month after month.
Representatives from Statistics Canada, Canada Mortgage and Housing Corporation, Finance Canada and Central 1 Credit Union have also reviewed and endorsed the MLS® HPI methodology, and provided valuable contributions in support of its development.
The MLS® HPI is another tool that REALTORS® can use to help buyers and sellers understand local real estate market price trends.