(Source: Reed Construction Data)
News of falling house prices in Canada is really not that new. However, as the chart illustrates, the extent of the drop in prices depends in large part on how they are measured.
One of the most frequently cited measures of house prices is published by the Canadian Real Estate Association (CREA). For the past 29 years, CREA has published sales data on existing residential properties collected by its members using the Multiple Listing Service (MLS®). Average sales prices are calculated based on the total value of MLS sales divided by the total number of housing units sold.
The CREA study makes no attempt to compare the prices of houses of similar size or type. Consequently, it is possible that house prices in one period could be different than the prices of houses in a subsequent period due to variations in size or type and not necessarily due to changes in demand.
Read the full article by Alex Carrick “Depth of Canada’s house-price drop depends on how you measure it” at Reed Construction Data (May 7 2009).