HPI – Calgary Prices Still Dropping in May

House Price Index



The House Price Index continues to paint a slightly different picture than what MLS stats are showing for the Calgary market.  In May 2009, MLS statistics showed that Calgary SFH prices increased by 2% from the previous month, and down 9% from May 2008.

However, the HPI, based on sales pairs, show that prices actually decreased 2.2% from April, and 12.2% from the previous May.  Calgary prices have been correcting since August 2007 and are now down 15.2% from their peak of that month. The Calgary index has shown monthly declines in 18 of the 21 months posted since then, including 11 months in a row from last July through May.

Of the six constituent metropolitan-area indices, four showed monthly rises in May – Halifax (1.3%), Montreal (1.5%), Toronto (2.0%) and Ottawa (0.7%). For both Halifax and Montreal it was a third consecutive monthly increase. The Ottawa monthly rise came after six consecutive declines, the Toronto monthly rise after eight consecutive declines. Calgary and Vancouver continued to correct downward in May, each showing an 11th straight monthly decline.

Four of the six city indices were down from a year earlier – Vancouver (−11.8%), Calgary (−12.2%), Toronto (−6.5%) and Ottawa (−0.1%). Montreal stands apart as the only market that has yet to show a 12-month decline. Halifax has shown 12-month declines in only two months, February and March 2009.

Canadian home prices in May were down 6.9% from a year earlier, according to the Teranet-National Bank National Composite House Price Index™. It was the sixth consecutive 12-month decline. The index is now down 8.9% from its peak of last August. However, its run of eight straight monthly declines ended in May with a 0.7% rise from April.
Source: Housepriceindex.ca

Source:  National-Teranet House Price Index

Source: National-Teranet House Price Index

Note:  The HPI lags by almost two months which is why May’s numbers were just released today.

click to enlarge

click to enlarge

8 responses to “HPI – Calgary Prices Still Dropping in May

  1. Vladimir Levin

    Mike, how does one read these graphs? Obviously the price of a house today is significantly higher than it was in 05 in Calgary. What does it mean that the graph drops below where it starts in the 90s?

    Mike Fotiou says: Vladimir, the graphs above are showing the annual % change in prices – not the prices themselves. I’ll post another graph showing what you’re looking for shortly.
    Update: I’ve posted the new graph.

  2. Me thinks the red and blue strings will one day join the rest of the rope again.

  3. Thanks for this. What explains the difference between the MLS rise and the HPI drop?

  4. Angler, the HPI uses what’s known as the repeat sales methodology. All properties that have been sold at least twice are considered in the calculation of the index. This is similar to the Case-Shiller Index used in the US.

    For more information on the methodology used, please visit http://www.housepriceindex.ca

  5. Mike,

    Do you think the June/July index period for the HPI will show an increase?

    It’s weird how the HPI can portray such a different picture from the MLS stats.

    HPI – down 6.5% year to date (May)
    MLS (median) – up 4%

    I guess maybe this methodology discounts seasonal fluctuation ?

    I’m curious as to how their calculation is actually performed. Do they just have a database with the address of every property sale, and then if the same property address is sold twice, that counts as a sales pair?

  6. Vladimir Levin

    Vis. CM’s comment, I think it would be interesting to show a single graph matching up historial trends for median, average, per sqft, and the HPI. Thanks for the explanation above Mike. I get it now – the original graphs you showed were displaying trends in price changes, not the prices themselves which obviously are still significantly higher than 2005.

  7. CM – I think we’re seeing the effects of the ultra low interest rates, it’s allowing people to buy bigger and bigger places, thus there are just fewer sales at the low end of the market… so it’s shifting the CREB’s average and median stats higher.

    At least that’s my guess

  8. Pingback: New home price decline largest in the nation - Edmonton Housing Bust

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