Economic analysis and reporting is one of the most essential services the Canadian Real Estate Association delivers to its members and the general public. Not only are these critical numbers heavily relied on by banks, government agencies and the Bank of Canada, they’re also the numbers reported in the media and greatly affect trade associations, real estate professionals, buyers and sellers alike.
Crunching those critical numbers for the Canadian Real Estate Association is chief economist Greg Klump and the result of his hard work and dedication is the Home Price Index (HPI) – a critical tool in evaluating the housing market.
This unique sector of the economy accounts for somewhere in the range of $23 billion in economic activity across the country each year. It’s critical to the greater economy in that it influences both job creation and consumer spending. The uncertainty that surrounds the sector, then, can have an incredible impact on the economy as a whole, particularly when you add the emotion that’s often associated with home buying into the mix.
That is why it is Klump’s job to create the HPI, which he describes as a “dispassionate, logical and truthful analysis of what’s going on in Canada’s housing market.”
The result is a highly valued set of figures specific to each geographic area in the country that measures the price of residential housing. A relatively new tool, the HPI is modelled after the Consumer Price Index (CPI), which measures the rate of price change for a variety of goods and services. The HPI, however, measures the change in price of housing features, letting banks, the media, government agencies, real estate professionals and buyers and sellers know whether the market is experiencing inflation or deflation at a particular point in time.
What makes the HPI so interesting is that although it represents the price of a typical property within each market, it also takes into consideration such factors that medians don’t, such as lot size, age of the home, the number of rooms and so on. At the end of each month the sales, as calculated by the HPI, determine how much was paid for bedrooms, bathrooms, lots and other features.
As your real estate professional, my job is to then pass that information on to you – the buyer or seller – to ensure you get the best value on your home sale or purchase. To find out more about the HPI and my services, please call me directly at 289-338–0767.