Maria Mak | 604-839-6368

February 4, 2014

Steady trends continue in the Greater Vancouver housing market

The first month of 2014 saw home sale and listing totals outpace historical averages in the Greater Vancouver housing market.

 

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 1,760 on the Multiple Listing Service® (MLS®) in January 2014. This represents a 30.3 per cent increase compared to the 1,351 sales recorded in January 2013, and a 9.9 per cent decline compared to the 1,953 sales in December 2013.

 

Last month’s sales were 7.2 per cent above the 10-year sales average for the month.

 

“The Greater Vancouver housing market has been in a balanced market for nearly a year. This has meant steady home sale and listing activity accompanied by stable home prices,” Sandra Wyant, REBGV president said.

 

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,345 in January. This represents a 4.2 per cent increase compared to the 5,128 new listings reported in January 2013.

 

Last month’s new listing count was 17.7 per cent higher than the region’s 10-year new listing average for the month.

 

The total number of properties currently listed for sale on the Greater Vancouver MLS® is 12,602, a 4.9 per cent decline compared to January 2013 and a nine per cent increase compared to December 2013.

 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $606,800. This represents a 3.2 per cent increase compared to January 2013.

 

With the sales-to-active-listings ratio at 14 per cent, the region remains in balanced market territory.

“If you’re looking to sell your home in a balanced market, it’s critical that your list price is reflective of current market conditions,” Wyant said.

 

Sales of detached properties in January 2014 reached 728, an increase of 34.3 per cent from the 542 detached sales recorded in January 2013, and a 10.5 per cent increase from the 659 units sold in January 2012. The benchmark price for a detached property in Greater Vancouver increased 3.2 per cent from January 2013 to $929,700.

 

Sales of apartment properties reached 753 in January 2014, an increase of 30.7 per cent compared to the 576 sales in January 2013, and an increase of 14.6 per cent compared to the 657 sales in January 2012. The benchmark price of an apartment property increased 3.7 per cent from January 2013 to $371,500.

 

Attached property sales in January 2014 totalled 279, an increase of 19.7 per cent compared to the 233 sales in January 2013, and a 6.9 per cent increase from the 261 attached properties sold in January 2012. The benchmark price of an attached unit increased 1.7 per cent between January 2013 and 2014 to $457,700. 

 
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Saturday, December 17, 2011

MLSLink HPI® explained

 

The MLSLink HPI® is an alternative measure of real estate prices that provides a clearer picture of market trends over traditional tools such as mean or median average prices. 

 

A mean average is the average price obtained by dividing the total dollar volume of sales by the number of sales.

 

To get a median price, all of the sales prices are arrayed in numeric order. In the case of an even number of sales, the median is the highest price in the lower half of the group. If there is an odd number of sales, the midpoint sale is taken as the median.

   

The MLSLink HPI® concept is modeled after the Consumer Price Index, which measures the rate of price change for a basket of goods and services. A basket is the combination of goods and services that Canadians buy most such as food, clothing, transportation, etc.

 

Instead of measuring goods and services, the MLSLink HPI® measures the change in price for a basket of housing features that we buy most often such as lot size, number of rooms, age of the home, the neighbourhood, etc.

 

The problem with averages
 

Before the MLSLink HPI® was introduced in 1997, REALTORS® and the public relied on monthly average pricing statistics to understand trends in housing prices. Averages, however, can be very misleading since the quantity and quality of the properties sold in any given area change over time for any number of reasons. As a result, average prices can fluctuate dramatically, making the housing market appear unstable.

 

To demonstrate this point, let’s look a couple of examples of how average prices are affected by various changes in sales patterns.

 

Example 1: How mean averages are affected by price changes

Year 1 ($)

Year 2 ($)

1. 139,000

1. 139,000

2. 145,000

2. 145,000

3. 230,000

3. 230,000

4. 265,000

4. 265,000

5. 290,000 median average

5. 290,000 median average

6. 320,000

6. 320,000

7. 365,000

7. 365,000

8. 425,000

8. *545,000

9. 480,000

9. *580,000

Total $2,659,000 ÷ 9 sales = $295,444, which is the mean average

Total $2,879,000 ÷ 9 sales = $319,888, which is the mean average
*price change from Year 1

Example 1: How mean averages are affected by price changes

In this example, the mean average increased by 7.7 percent while the median average stayed the same. This shows that price changes at either end of the price scale affect the mean average, but can leave the median average virtually unchanged.

 

Example 2: How median averages are affected by price changes

Year 1 ($)

Year 2 ($)

1. 139,000

1. 139,000

2. 145,000

2. 145,000

3. 230,000

3. 230,000

4. 265,000

4. *290,000

5. 290,000 median average

5. *320,000 median average

6. 320,000

6. *335,000

7. 365,000

7. *395,000

8. 425,000

8. *400,000

9. 480,000

9. *405,000

Total$2,659,000 ÷ 9 sales = $295,444, which is the mean average

Total$2,659,000 ÷ 9 sales = $295,444, which is the mean average
*price change from Year 1

 

In this example, the mean average stayed the same while the median average increased by 9.4 percent. This shows that price changes in the mid-range section of the price scale affect the median average, but can leave the mean average virtually unchanged.

 

Neither of these price measurements take into account the changes in buying pattern — In year one luxury homes in the region are popular; the following year more modestly priced homes are popular. Both methods of price tracking can have the effect of overestimating the market price that home buyers are actually paying for their homes.

Defining the typical home

 The MLSLink HPI®is a more stable price indicator than average prices, because it tracks movement of "middle-of-the-range" or "typical" homes and excludes the extreme high-end and low-end properties. Typical homes are defined by the average home features sold in Greater Vancouver communities.

 

These features together become the "benchmark" house, townhouse or apartment in a given area. A benchmark property is designed to represent a typical residential property in a particular MLSLink HPI® housing market, such as Richmond or North Vancouver.

 

For example, perhaps the basket of features for a typical home in a given community includes a 10-year-old, 3-bedroom house on a 7,200 sq. ft. lot, with 8 rooms, 2 bathrooms, a fireplace and a 1-car garage. A benchmark price for this home can be created from the individual dollar values given to each of the above features.

 

The breakdown of each month’s real estate sales in a given area are estimates of current prices paid for bedrooms, bathrooms, fireplaces, etc. Prices for these features are then applied to the typical house model and an index price is estimated for that month.

 

This type of pricing model involves estimating the price of a property’s features rather than the property itself.Note: The MLSLink HPI® offers only a benchmark in which to track price trends and consumers should be careful not to misinterpret index figures as actual prices. Benchmark properties are considered average properties in a given community and do not reflect any one particular property.

 

 

 

 

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