Source: Developed by Analytical insight; CREA data
The Hi (Housing insight) score, with supporting scores, provides a quantiative overview of the current housing market from a buyers’ perspective.
The idea is to provide a general sense of the housing market environment for buyers, before one goes into the specifics of what they can afford, current listings etc. i.e. helping answer the ever-relevant questions - ‘Is this a good time to buy? How is the market, in general?’
While there are housing price indices that measure month-on-month and/or year-on-year increases, giving us an indication of price changes, these offer a limited view from a long-term trend perspective, and miss out on other important parts of the housing market picture.
There is also a good sense of the general ‘feeling’ about the market e.g. ‘it’s a really tough interest rate environment right now’ or ‘the market is crazy right now (alluding to increased competition - supply barely keeping up with the demand)’ but there isn’t a single indicator to quantitatively assess the current housing market for buyers.
Analytical insight studied over 18,000 data points, dating back to January 1975, to devise a single HAi score (and supporting scores) to act as a general housing market indicator for home buyers - straightforward, and easily digestible, with as little complexity as necessary.
1.
Price: Whether the price is currently above or below the long-term trend (since 2005, which is the oldest available sales price data, currently), with a high score indicating you’re getting a good deal i.e. prices are reasonable (below market trend).
Data Source: CREA, the Canadian Real-Estate Association (data available since 2005).
3.
Availability: Number of sales or listings - while most of us instantly recognize the importance of affordability, we also need to make sure there’s sufficient availability in the market, i.e. answering the question - ‘Is this is a normal market?’ i.e. is there sufficient inventory/sales in the market? Especially, to balance the outlook when affordability is really good because a ‘good’ buyers’ market would also mean it’s not the greatest time to sell. So, while a really high affordability score is great! What’s the point if you likely won’t find your dream house?
A neutral availability score would indicate that the market is close to the long-term trend in #sales or #deals i.e. a closer to normal market with sufficient inventory (houses). A score of 0 would mean there is hardly any inventory in the market, which makes it less likely that your dream house is on the market. A score of 100, on the other hand, would mean there has never been so much availability – which doesn’t say anything about how competitive the market is, though, which makes our next (and last) factor all the more important.
Data Source: CREA, the Canadian Real-Estate Association (data available since 2007).
4.
Competition: R (ratio of sales/listings) - finally, we need an indicator of how competitive the market is, currently, to ‘balance’ the availability. A Competition Score close to 0 would indicate the market has never been more competitive and a score closer to 100 would indicate that the market is at its least competitive.
Data Source: CREA, the Canadian Real-Estate Association (data available since 2008).
Scores are percentile ranks in a 0 - 100 range, with all scores in the range:
| Score | Description | Colour code | Comment |
| < 20 | Very poor | ||
| 20 - 40 | Poor | ||
| 40 - 50 | Below average | ||
| 50 - 60 | Neutral | ||
| 60 - 70 | Fairly good | ||
| 70 and above | Good | top ~30 score | |
| 80 and above | Very good | top ~20 | |
| 90 and above | Exceptional | top ~10 |
The affordability score (which considers the interest rate environment and pricing environment), choice score (which considers the availability and competition environment) and the overall Hi score (comprising the combined affordability and choice scores) also follow the same scoring rubric.