MONITORING PRICE BEHAVIOR IN THE RESALE HOUSING-MARKET - A NOTE ON MEASUREMENT AND IMPLICATIONS FOR POLICY

We compare our constant-quality index of house prices in Toronto for the period 1974-1989 with the standard MLS index, which has widely-acknowledged limitations. The short-run signals regarding price movements often diverge, and the MLS index suggests a more rapid rate of price escalation. We review the importance of accurate measures of resale prices to the formulation of housing policy, and to the related issue of whether the housing market is efficient.