In November of last year, the Victoria Real Estate Board released its MLS® Housing Price Index, or HPI. This is a statistical measurement that paints a more accurate picture of housing prices, by examining sale prices each month and using a data model to scrub outliers from the data set. Simply put, it is more realistic because it goes beyond the simple mathematic measures of average and median. Keep reading to learn more.At the heart of the HPI is what is known as a benchmark home. A benchmark home is a notional home which contains attributes common to an area or neighbourhood. This allows the data model to examine sales each month to see how well they fit the benchmark home for the area. It also acknowledges that typical homes are different in the various different communities and neighbourhoods that make up the Victoria Real Estate Board’s trading area. It’s not hard to understand that a home in Broadmead is very different than Burnside West – and even more granular – a home in Sunriver Estates is very different than a home on the tent-lots in the village core.
The HPI is an index, similar to the Consumer Price Index (CPI). The CPI uses a basket of goods to measure inflation – you can think of the benchmark home as a basket of features of a home (number of bedrooms, typical square footage, age of the home, and so on). Being an index, it uses a base year to compare to. The VREB HPI’s base year is 2005, when the index was 100 – so it measures changes from that. At a glance, one can see that if the index is 125, prices are 25% higher than in base year 2005. It makes comparisons easy this way. For more information on HPI, click here.
Without further ado, let’s have a look at the HPI for single-family homes in Sooke for the past few years:
Anyone who has been observing our market in the past few years knows that the market peaked in 2008 and then again in 2010, and since then prices have been slowly sliding down, equating to about a 12% decrease in the HPI (June 2010 146.9 to March 2014 129.8). The HPI is so useful here because it paints the true picture of what’s been going on, compared to the median price I’d been reporting previously, which appears basically flat since 2010 (wow, actually):
Compare the chart above to the HPI for the same period, and I think you’ll get a much clearer picture as to what’s been going on:
As I have explained in previous statistics articles, the reason prices have actually been falling even though the median price didn’t reveal it, is because buyers are getting more for their money. So while houses in the same price range were selling all the while, the features and attributes of those homes got better as time went on. The HPI can account for this, and that is a very good thing. Now, you might be wondering how this translates to actual prices. For this, I find it more valuable to drill down into the various neighbourhoods:
So, is it doom and gloom for Sooke real estate? No, I don’t think so. Agents I talk to and myself included, have been seeing a lot of activity out there. Personally, I am off to a great start this year. Could this be the year prices turn a corner? Maybe, but no one can predict it.
Some items of interest about Sooke real estate sales this year:
- Most expensive single family home sold so far: 21 and a half acres in East Sooke, on the waterfront, sold for $2.25M
- Most expensive normal single family home sold so far: $590,000 – a home on acreage in the Demamiel Creek Estates area.
- Least expensive single family home sold so far: $212,000 for an unfinished home on acreage in the Otter Point area (my listing)
- Least expensive complete single family home sold so far: $258,000 for an older home in the Broom Hill neighbourhood (my sale).
- Total number of sales so far in 2014: 44 (compared to 52 in the same period last year)
- Average time to sell: 107 days (about on par with last year)
As always, if you have questions about these statistics or how they might apply to your home – just get in touch.