The Home Price Index Shows Flat For November

Filed under Home Price Index by on January 26, 2011 at 7:48 am {no comments}

Home Price Index from peak to present were reported unchanged in November 2010, on average, according to the Federal Home Finance Agency’s Home Price Index. 

We say “on average” because the government’s is a data composite for the country. The index doesn’t measure citywide changes in places like Chicago , nor does it get granular down to the neighborhood level to measure places like Bucktown.

Instead, the Home Price Index groups state data in 9 regions with each regions having as few as 4 states in it, and as many as 8.

Not surprisingly, each of the regions posted different price change figures for the period of October-to-November 2010.

A sampling includes:

  • Values in the Pacific region rose +1.2%
  • Values in the New England region rose +0.3%
  • Values in the Mountain region fell -1.9%

The complete regional list is available at the FHFA website.

That said, none of these numbers are particularly helpful to today’s home buyers and sellers and that’s because everyday people don’t buy and sell homes on the Regional Level. We do it locally and the government’s Home Price Index can’t capture data at that level.

It’s a similar reason to why the Index is irrelevant to buyers and sellers.

November’s Case-Shiller Index showed home values down 1 percent in November, but that conclusion is a composite of just 20 cities nationwide — and they’re not even the 20 largest cities. Philadelphia, Houston and San Jose are conspicuously absent from the Case-Shiller list.

So why are reports like the Home Price and the Case-Shiller Index even published at all? Because, as national indicators, they help governments make policy, businesses make decisions, and banks make guidelines. Entities like that are national and require data that describe the economy as a whole. Home buyers and sellers, by contrast, need it locally.

Since peaking in April 2007, the Home Price Index is off 14.9 percent.

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Home Values Up 0.4 Percent In August, On Average

Filed under Home Price Index by on October 27, 2010 at 7:48 am {no comments}

Home Price Index from April 2007 peak

Consistent with the most recent Case-Shiller Index, the government’s said home prices rose between July and August. 

The Federal Home Finance Agency’s data showed values up 0.4 percent nationwide, on average. Region-by-region, however, the results were scattered. Coastal states tended to perform poorly. Plains states tended to perform well.

A brief look at the regional disparity:

  • West South Central : +1.5%
  • East North Central : +1.2%
  • Pacific : -0.2%
  • South Atlantic : -0.2%

Breakdowns like this are important because they highlight the fundamental problem with national real estate data and that’s that home buyers in Chicago don’t buy real estate in a national market, or even a regional one.

Buyers buy local.

When we look at national figures like the Home Price Index, it’s important to remember that real estate is a collection of tiny markets which, when lumped together, form small markets which, in turn, lump together into larger markets and so forth.

To illustrate this point, a deeper look at August’s Home Price Index data shows that, within the aforementioned Pacific Region, in which fell 0.2%, the state of California posted a 2.9% increase. You can be sure that within the state of California, there are cities that performed better than the 2.9 percent, and within those cities, there are neighborhoods that did the same.

Real estate is most definitely local.

That said, we can’t discount the national report entirely. Broader housing statistics like the Home Price Index reflect on the economy and are often used to help shape policy in the nation’s capital. When you need to know what’s happening in your hometown, though, your best source of data is a knowledgeable real estate professional.

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The Home Price Index Shows Some Regions Up, Some Regions Down

Filed under Home Price Index by on February 26, 2010 at 7:47 am {no comments}

Monthly changes in Home Price Index Since April 2007

Earlier this week, the private-sector Index showed home prices slightly lower between November and December.  Thursday, the public-sector showed the same.

Publishing on a 2-month lag, the Federal Home Finance Agency said home prices fell by 1.6 percent nationally in December.  And that’s an average, of course.  Some regions performed well in December as compared to November, others didn’t.

  • Values in the Middle Atlantic states improved slightly
  • Values in New England were essentially unchanged
  • Values in the Mountain states sagged, down 3.5%

These aren’t just footnotes. They’re an important piece toward understanding what national real estate statistics really mean. In short, “national statistics” are just a compilation of a bunch of local statistics.

For example, if we dig deeper into the Home Price Index 70-page report, we find that cities like Terre Haute, IN, Buffalo, NY, and Amarillo, TX posted year-over-year home price gains. You won’t see that in a “national” report.

Furthermore, it’s a sure bet that those same cities, you could find neighborhoods that are thriving, and others that are not.  Just because the city shows higher overall, it won’t necessarily be the case for every home in the city.

Every street in every neighborhood of every town in America has its own “local real estate market” and, in the end, that’s what should be most important to today’s buyers and sellers.  National data helps identify trends and shape government policy but, to the layperson, it’s somewhat irrelevant.

So, when you need to know whether your home in Oak Park is gaining or losing value, you can’t look at the national data.  You have to look at your block — what’s selling and not selling — and start your valuations from there.

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November Home Values Up 0.7%

Filed under Home Price Index by on January 29, 2010 at 7:47 am {no comments}

Home prices ticked up 0.7% in November.  The Federal Housing Finance Agency tracks this data and, like , it runs on a two-month delay.

That is perhaps the biggest issue.  The Realtor data shows 80% of Pending Home Sales close within 60 days meaning that the home price figures are always about a full sales cycle behind.

Over a year, the data can be fairly useful.  The facts are that home prices are up and home supplies are down over the past 12 month.

There are three main reasons to buy a home today:

  2. Home prices are low
  3. Mortgage rates are low

We’re inside of 90 days on the expiration of the tax credit, we’re already seeing home prices move higher, and are going to rise at the termination of the Fed’s purchase program.

Homes may not be this affordable for quite some time.

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