Listen closely when people are throwing around stats about home prices. First thing to ask is, which kind of price are they talking about?
Average home price: The average of all house prices within a category, for example, the total of all condo sale prices in a given area divided by the number of condos sold there.
Median home price: The midpoint of sales prices where an equal number of properties were sold above and below this sales price.
Benchmark home price: MLS® estimate of the value of a “typical” home in a community, based on the most popular combination of features, e.g., age, size, number of bedrooms and bathrooms. You’ll find separate benchmark prices for detached, attached and condo homes.
House Price Index (HPI): Ongoing record tracking aggregate sales of similar homes. MLS® has its own HPI which traces the price trends for detached, attached and apartment properties. The baseline of 100 was set on Jan. 2005 prices. Some highly populated areas have been broken down for more complete data.
Two Canadian companies also publish HPIs. The Teranet National Bank House Price Index covers eleven cities including Metro Vancouver and Victoria. There’s also the Brookfield RPS House Price Index, starting in 2005 and covering 13 cities, including Metro Vancouver and Victoria.
One thing these indicies don’t tell us is the distribution of prices, i.e., how many homes sell at the different price points. See the Urban Futures report Trends in Lower Mainland Housing Prices to understand this important factor in our real estate markets.
What other real estate terms are as clear as mud? Let me know in a comment below and I'll endeavour to respond with an explanation just for you!