Chances are, you’ve probably heard the word “index” used in one economic context or another including the stock market, consumer prices, and home prices.
Indices not only make it easy to gauge how something has changed over time, but are also useful when tracking and comparing trends for two or more things, regardless of how they were measured before being transformed into index numbers.
So what makes an index an index? Any index is just a number that measures the change in something over time. That “something” can be measured in dollars, or units, or even litres. An index is simply a fraction that’s multiplied by 100. The denominator of that fraction is the measure of something at a fixed starting point and the numerator is its value some time later. Because the index value for whatever is being measured is just a number, its original unit of measurement is irrelevant.
REALTORS® know the importance of keeping up-to-date on real estate market trends where they work with buyers and sellers. They also know how changes in direction for trends can affect their own business plans.
Home price trends get a lot of deserved attention and the MLS® Home Price Index (HPI) is the best way of gauging them. The MLS® HPI reinforces REALTORS®’ authority on home pricing. Only REALTORS® have access to detailed MLS® HPI price trend information to show their clients how prices are evolving for typical homes located in specific neighbourhoods.
If the MLS® HPI is unavailable for your market, talk to your local Board or Association about getting them onboard because, as of now, they are eligible for the MLS® HPI.