The housing market recovery appears to turning the corner, but Sacramento is behind the curve and still playing catch-up.
According to the Federal Housing Finance Agency’s Home Price Index, home prices rose by a seasonally adjusted 0.7 percent between May and June 2012. The index is now up 3.0% over the past 12 months, and made its biggest quarterly gain since 2005 last quarter.
California is up 4.0% over that same 12 months, but Sacramento is pulling this average down, as we are only seeing a fraction of this rise in values. The FHFA’s Home Price Index measures home price changes through successive home sales for homes whose mortgages are backed by Fannie Mae or Freddie Mac, and for which the property type is categorized as a “single-family residence”.
Condominiums, multi-unit homes and homes with jumbo mortgages, for example, are excluded from the Home Price Index, as are all-cash home sales.
June’s HPI gives buyers and seller in Sacramento reason to be optimistic, but it’s important to remember that the Home Price Index — like so many other home valuation trackers — has a severe, built-in flaw. The HPI uses aged data. It’s nearly September, yet we’re talking numbers from June.
Buyers and sellers in search of real-time home price data, in other words, won’t get it from the FHFA.
According to the Sacramento Bee Real Estate section just a few days ago, we have seen home values decline 1.5% year over year in July. To many this feels as if the bleeding has stopped and we will start to see values rise, but lack of inventory and multiple offers is making it difficult for many to jump into the market. In hindsight, this might be just what the doctor ordered for Sacramento – steady, even keeled, and improving….
The Home Price Index is a useful housing market gauge for law-makers and economists. It highlights long-term trends in housing which can aid in allocating resources to a particular policy or project. For home buyers and sellers throughout California , however, it’s decidedly less useful. Real-time data is what’s most important.
For that, talk to a real estate professional.