To Index Or Not To Index

Just when you start to have a grasp on how to determine what is happening with property values (using median and average prices as a starting point), along comes the Real Estate Associations with a new, improved and better solution. The question is who is it more improved for and is it better?
For years, and for better and for worse, Realtors and homeowners used average home prices and median home prices as guides to what was happening in the market. This system had some issues and some faults, but it’s been consistent.
One issue that plagued the system was how the average could be moved up or down due to an excess of very expensive homes being sold, or vice versa a plethora of low priced units being moved in the market. This is why the median tended to provide a better indication of what was happening with the market.
A second issue was the breadth of the area the average contained. There was Calgary, which provided a huge disparity of properties and areas, acreages which were even more disparate and surrounding towns/cities, which became even vaguer. This made determining approximate values even tougher. It wasn’t perfect, but we learned to use it and work with its quirks.
Now the rules are changing and the Real Estate Associations have introduced a new Index to help homeowners understand trends and values of properties in their area. This new index is based on a similar idea to the Consumer Price Index where they establish a benchmark price for properties and then use this as a guide to whether values are increasing or decreasing in comparison.
Technically, this all sounds great. Now you will be able to see over time how a specific property compares to the standard benchmark.
This brings me to a major problem I see with this new indexes or benchmark. This new model includes both quantitative and qualitative housing features. Quantitative features will include measureable attributes. These include square footage, number of bedrooms etc, they are based on quantities. Qualitative however, are not measurable to the same degree and include the type of view and proximity to amenities, these are the qualities of properties and this is more subjective.
I can see the value of square footage and bedrooms when it comes to a benchmark, but my idea of a view and the proximity of golf courses, parks and transportation will differ drastically from someone who golf’s, has young children they take to the park and uses transit to get to work. By making these subjective, it can drastically affect the comparison and due to this, I find it to be a huge potential flaw.
Now this index is brand new and this may lead to more tinkering of the benchmarks as we become used to the new standard and discover any potential flaws. Over time it may be the best thing since sliced bread and my concerns may end up being entirely unfounded, but for now the question for me will continue to be, “To index or not to index”?