Canada’s newest home price index hits the market

As reported by Tara Perkins, The Globe and Mail, April 24, 2014

“There’s a new home price index on the market.

Brookfield RPS, a subsidiary of Brookfield Asset Management Inc., has quietly soft-launched its own Canadian home price index. It will go head-to-head with the country’s two main price indices, one by the Canadian Real Estate Association and another by Teranet in partnership with National Bank.

Home price indices seek to go beyond average home prices to better gauge what’s actually happening. That’s because average selling prices are easily distorted. For example, a higher number of sales in a pricier neighborhood causes them to rise, while more sales of condos – as opposed to detached homes – can cause them to fall.

David Lacey, chief executive officer of Brookfield RPS, had been looking for ways to make use of the company’s information since joining the firm. “I got looking at this appraisal information that was really sitting in our databases and I went to the guys and said ‘Look, we’re actually sitting on a gold mine here,’” he says.

Things got serious toward the end of 2012 when Canada Mortgage and Housing Corp. released covered bond guidelines. Covered bonds are issued by banks and backed by pools of mortgages. CMHC’s guidelines said that the banks would have to update the value of the mortgages at least once a quarter. In other words, they’d have to mark their portfolio to market prices using a home price index.”

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