03/13/2017
When Not Making A Top 10 Housing List Still Indicates Good Things
Many of you have expressed interest in the data contained in the quarterly Federal Housing Financing Agency (FHFA) Home Price Index (HPI) appreciation reports that I’ve mentioned in the past. So as that data was just released last week of Q4 2016, I wanted to report on those findings. And I have an interesting take on the information.
First, let me summarize the highlights:
I. On a national level:
Home prices increased 6.15% for the year and 1.50% in Q4.
Home prices rose in every state across the country except for West Virginia and Wyoming.
Of the 9 census regions, our region - the Pacific Region – posted the second highest increase at 7.44% annualized appreciation, edged out just marginally by the Mountain Region’s appreciation at 7.95%.
II. On the state level:
California posted an overall 6.64% annual appreciation gain, placing it in 16th place and out of the Top 10 place it has held in recent times, as shown by the FHFA State Ranking Chart below.
III. On a local level, modest gains were seen:
The greater San Francisco Region - Peninsula captured 1.09% in annual appreciation and a quarterly gain of 2.57%.
Alameda County posted strong annual gains of 7.95% and a quarterly gain of 1.52%.
Silicon Valley saw a 1.96% annual gain and a 1.86% quarterly decrease
I’m sure some of you are greatly surprised by the data for our local markets. REMEMBER, however, that the FHFA HPI tracks all, and therefore only, Fannie and Freddie backed mortgages. These are mortgages with a maximum loan amount of, in our areas, $636,150 (Los Angeles, SF, DC and NY are designated high cost areas with a higher conforming loan limit) and $424,000 in most other areas. While this comprises an extremely large portion of the market across the U.S., and is therefore a highly reliable tracking index, it is much less so in our immediate areas.
Thus, this suggests that our local medium cost areas are holding steady with manageable appreciation. Higher end markets, with average price points in the mid $1M to $2M range, frequently fall outside the trackable guidelines for FHFA. These markets, having come off of two consecutive years of high double-digit price appreciation, settled out the year at a more stabilized though also healthy appreciation in the 6-7% range.
What I’m fascinated to see, and glad to see, is that other regions and states are experiencing very healthy market gains. We don’t want to be the market always on the tip of the explosive appreciation cycle. This has brought fears – real or not – of a housing bubble. When housing is strong across the nation and other markets take the crown for highest and fastest appreciation, we here in the Bay Area ought to take large comfort in being a part of an overall healthy real estate market. Stable and strong are two words that I would use to describe where our market currently stands.
SFRaymondHo.com
