Home Prices See Greatest Dip Since Q1 2008

Housing prices saw their largest quarterly decline since the fourth quarter of 2008 in the first quarter of this year, says the latest data from the Federal Housing Finance Agency. Prices continue to fall, as evidenced by a 2.5% dip in FHFA’s first quarter seasonally adjusted purchase-only Home Prices Index.

In the span of one year, house price appreciation has dropped 5.5%. The HPI has not posted a positive quarterly or yearly appreciation rate since the first quarter of 2007.

“House prices in the first quarter declined in most parts of the country,” said FHFA Acting Director Edward J. DeMarco in a press release. “In many local real estate markets, particularly those hit hard by this cycle, foreclosures and other distressed properties are still a key factor in recorded and anticipated future sales and may be delaying price stability or recovery. Fortunately, serious delinquency rates also are declining.”

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FHFA’s most significant findings include a first-quarter seasonally adjusted purchase-only HPI decline in 43 states as well as the District of Columbia; it also saw a 3.4% price drop in the Mountain region, the most extreme decline out of the nine regions tracked by the agency. The West South Central Division, says the release, posted the strongest housing prices with a decline of only 0.5%.

Only three states, Alaska, West Virginia, and North Dakota posted positive HPI indexes, while Idaho, Arizona, Oregon, and Georgia had the four lowest HPIs, with their appreciation percentages dropping double digits. Based on a one-year housing appreciation, Alaska nabbed top ranking with a 2.7% improvement in house price index; Idaho exhibited the lowest HPI, tanking with a 15.7% downturn.

“The HPI is a measure designed to capture changes in the value of single-family houses in the U.S. as a whole, in various regions and in smaller areas,” said FHFA. “It also provides housing economists with an analytical tool that is useful for estimating changes in the rates of mortgage defaults, prepayments and housing affordability in specific geographic areas.”

This recent index uses a slightly different index from FHFA’s past method for calculating the national and Census Division price indexes. The new model considers individual state indexes rather than estimating from pooled, transaction-level data of overall national statistics.

View the FHFA report here.

Written by Alyssa Gerace

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  • Prices down but sales sporadically up seems to be the story of this housing downturn.  No expects prices to turn around except along the ocean coasts to any great degree until 2013 or beyond.  Before that occurs at least 7,000,000 more Baby Boomers will turn 62 with little expectation that we will see little more than a slight rise in HECM endorsement volume before then.

    It is not demand which will turn reverse mortgage volume around; it is qualified demand which will.

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