The MLS Home Price Index (HPI) is supposed to act like the more familiar Consumer Price Index (CPI). While the CPI tracks the price of a basket of goods, the HPI tracks the price of a basket of house attributes. For a more detailed look into how the HPI works, check out this blog post.
Similar to my monthly Toronto real estate market charts, I make my full set of HPI charts (with the charts much larger and more legible) available as a SlideShare report
The HPI isn't as volatile as average prices
That is one of the benefits of it. Here's a comparison with the 416 average price (which takes into account all 416 housing types, which is about half condo apartment sales). This month the HPI composite kept declining, despite an uptick in the 416 average property price.
How do the indexes compare across housing types?
The composite index is made up of constant weights of 4 different benchmarks. As you'd expect, the composite index lies in between the highs (condo apartments) and lows (single family detached houses).
How far have the clocks rolled back?
All of the benchmarks are down from peak. But how far back have they regressed?
Detached homes are back to the January levels.
Single Family Attached homes are back to February levels.
Townhouses are back to April levels:
And Apartments, after increasing the last two months, are back to their HPI peak from June.
So all have rolled back, but the farthest rollback was to January. So we're still in this calendar year, meaning we've just given back the gains from earlier in the year. If you were transplanted back in time one year and thought the market was due for a correction and then you skipped ahead to the present time, you wouldn't have seen any decline at all - just increases across the board.
The above charts, along with the YoY percentage gains are available on the SlideShare report.
About Scott Ingram CPA, CA, MBA
Knowledge is power. I take a "Moneyball" approach to real estate - where both quantitative trends and qualitative information are important. Keeping on top of trends is especially vital in today's rapidly shifting Toronto real estate market. I will dig into numbers most realtors can't or don't, to help you make the right buying or selling decisions for your situation. You'll find my accountant-honed analytical skills and business strategy experience combined with my hometown knowledge and passion are great to have at your back: Your home is the single largest investment you'll make - trust it with an accountant.