Knowing neighbourhood demographics in detail – from homeowner movement to pricing on the street-by-street level – is a critical advantage for brokers and one a new index aims to provide them.
“We have offered the House Price Index for free for many years,” says Eduardo Alzamora, director of financial services for Teranet, a company that has been compiling Canadian home prices for two decades. “But this will offer detailed pricing models and trends on a scale never before seen.”
In co-operation with National Bank, Teranet just wrapped up collating the neighbourhood numbers in Quebec, and has already started their Ontario model, with British Columbia soon to follow.
“We started in Montreal back in November and just finished at the end of December,” says Alzamora. “We should finish mapping out Ontario by the end of the year, and definitely start with B.C. this year as well.”
What makes the neighbourhood indices different from the Home Price Index is the detail and accuracy of specific neighbourhoods – accurate to within 3 per cent of the actual value of that neighbourhood’s portfolio.
“Definitely lenders and mortgage insurers will want to be aware of what is happening on a neighbourhood level. They have already shown interest in our Quebec numbers,” says Alzamora. “And this is of value to superbrokers, who will want to understand the dynamic of a neighbourhood; they can draw on the 20 years of data we’ve collected and know whether a dip in one neighbourhood is a blip or part of a larger trend, and better understand what type of activity is happening in a certain area.”
For the Quebec model, Teranet – National Bank identified 176 neighbourhood models, with 105 in the greater metropolitan Montreal area alone.
“The demand for the sub indices will dictate where they will be conducted next,” says Simon Cote, National Bank Financial Group. “Within the next few weeks Toronto will be finished, and B.C. will be next.”
Of added value to brokers and lenders – not to mention real estate professionals – is the precise and accurate portrayal of neighbourhood trends.
“Everybody has a very clear opinion as to what is going on in the industry,” says Cote. “But with our analysis, you can confirm or deny what is going on.
“From what we’ve seen so far, there is more ‘fear’ than ‘fall’ anticipated for the housing market."