Tuesday, 12 December 2017

Price is a Matter of Perspective

Written by Posted On Tuesday, 22 July 2003 00:00

When Statistics Canada reports that house prices continue to rise across Canada, that does not automatically make your home worth more.

Using a statistical measure called the New Housing Price Index , contractors' selling prices are compared month by month and annually to track patterns in prices using the newly-established standard of 1997=100.

For example, based on the May 2003 New Housing Price Index , the following observations were made:

  • New house prices continued their climb in May, up from 0.4% in April to 0.6%. On a 12-month basis, the Index advanced 4.4%. This is down slightly from last month when the published annual increase was 4.5%. A favourable housing market and higher prices for inputs, such as labour and land, continued to push prices up nationally.

  • Even in the midst of a healthy housing market, some areas experience stagnant or dropping prices. Charlottetown, Kitchener-Waterloo, Windsor, Sudbury-Thunder Bay, Winnipeg and Saskatoon showed no monthly price changes in the New Housing Price Index, a key measurement in determining the health of construction and real estate industries.

  • The rate of price increase also differs regionally. For example, for the third consecutive month, Quebec City registered the largest 12-month increase (+9.2%) for new homes followed by Hamilton ON (+7.0%) and Regina (+6.7%).

  • Monthly price rises occurred in 15 of the 21 urban centres surveyed by Statistics Canada. Of the centres with the strongest growth, St. Catharines-Niagara led the way with an increase of 1.3% followed by increases of 1.1% in Toronto and Saint John-Moncton-Fredericton. Significant increases were observed in Vancouver (+0.8%) and Hamilton (+0.6%). Home builders in all these areas credited favourable market conditions along with higher prices for building materials and labour with the increase. Home builders in Saint John-Moncton-Fredericton, Vancouver and Hamilton also noted higher land values.

    FYI: Federal government housing analysts converted the time base of the indexes from 1992=100 to 1997=100 with the May 2003 New Housing Price Index release. Methodology for aggregating individual price quotes to city, regional and national level indexes are the only things that changed. The new 1997=100 series will be available retroactively from January 1981 so the index movement between January 1981 and April 2003 will be the same for the 1992=100 and 1997=100 series. The 1992=100 based NHPI will not be updated after April 2003.

    So where do the statistics leave you?

  • If you are selling an older home to buy a new house or condominium in a comparable area, you may find the value gradient goes against you. Increases in new home prices may escalate prices of nearby resale homes, but for properties that require extensive modernization or maintenance, significant land value increases may be necessary before property values rise.

  • If you want to buy into a better area and new housing is all that is available, you may find that your housing dollars do not go quite as far.

  • If you're selling in a preferred area to move into a new condominium community, you may gain on the move.

    Neighbourhood and regional pricing differences should be taken into account when selecting a new location. The dollar gap between what you net in a sale and what you'll spend-- that tax-free liberated home equity -- may be essential to preserve your standard of living in the new home. Most experienced real estate professionals offer free comparative market analysis (CMA) for sellers so that they receive a clear picture of current real estate value when establishing list price.

    List price and selling price will also be determined by the condition of your property. Twenty- or thirty-year-old plumbing and electrical systems may make your house less attractive to buyers who compare your property with available new homes.

    When buying, don't settle for off-the-cuff price quotes. Today's astute buyers should ask their buyer-agent for a CMA of any property they consider buying to be sure listing price reflects CMA numbers and that pride of ownership has not made the seller overly optimistic.

    Make your decisions about buying and selling relative to your needs and your market as ever-changing statistics make a poor foundation.

    Statistics Canada's May 2003 Building Permits release reported the value of building permits declined in May as construction intentions for single-family homes hit a 17-month low. Builders took out $3.9 billion worth of building permits, down 2.0% from April and a decrease that has continued for four months. But don't panic, Statistics Canada analysts assure Canadians that "despite month-to-month fluctuations this year, Canada's building sector is still performing strongly."

  • Rate this item
    (0 votes)
    PJ Wade

    Futurist and Achievement Strategist PJ WADE is “The Catalyst”—intent on Challenging The Best to Become Even Better. A dynamic speaker and author of 8 books and more than 1800 published articles, PJ concentrates on the knowledge, insight, communication prowess, and special decision-making skills essential for professionals and their clients who are determined to thrive in the 21st-Century vortex of change.

    PJ Wade's latest business book, What's Your Point? Cut The Crap, Hit The Mark & Stick! (CatapultPublishing.com) further proves PJ's forward-thinking expertise and her on-point ability to explain technical, even non-verbal, communication details in practical, understandable terms. Print publication: Fall 2017

    PJ: “What's Your Point? — the pivotal 21st-Century business question—must be answered before you open your mouth, hit a key, or tap anything. Too often 'Your Point' is not clear to you, and communication remains an expensive illusion.”

    As The Catalyst, PJ concentrates on enhancing communication ROI for experienced advisors, executives, entrepreneurs, business owners, and other savvy professionals, who may not have received as much formal training in communication as they have in their own field.

    PJ’s on-point professional development programs and featured presentations start where other business content leaves off. What's Your Point?  programs, presentations, and content present the rich combination of practical suggestions, game-changing concepts, and on-point perspectives essential to those rising to the challenge of modern effective business communication—online & off.

    Onward & Upward — The directions that really matter! Reach PJ at pjwade@TheCatalyst.com and visit her Blog: http://www.thecatalyst.com/blog/.

    www.thecatalyst.com

    Realty Times

    From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.