January Residential Property Values Drop 0.6%
FNC’s latest Residential Price Index™ (RPI), released Wednesday, indicates that U.S. residential property values declined in January, in spite of continued economic expansion and an improving job market in recent months. The latest persistent downtrends are driven primarily by conditions in the distressed market, which remains overwhelmed by the disposal of foreclosed and REO properties. Down 0.6% from December, January marks the sixth consecutive month-to-month price decline. Property values nationwide have returned to January 2003 levels.
Based on the latest data on non-distressed home sales (existing and new homes) through January, FNC’s national RPI shows that single-family home prices fell in January to a seasonally unadjusted rate of 0.6%.[1] (See the Month-to-Month Index Trends table.) As a gauge of underlying home value, the RPI excludes sales of foreclosed homes, which are frequently sold with large price discounts reflecting poor property conditions. The RPI is the industry’s first hedonic price index − built on a comprehensive database blending public records with real-time appraisals of property characteristics and neighborhood attributes.[2]
All three RPI composites (the National, 30-MSA, and 10-MSA indices) show similar month-to-month declines in January, down approximately half of a percentage point from December. The two broader indices indicate that the pace of month-to-month price declines has remained mostly unchanged in the last two months. The 10-MSA composite, however, shows signs of improvement since December, declining less rapidly at 0.5% in January compared to 1.1% in December.
The indices’ year-to-year trends indicate that the annual rate of price declines has stabilized in recent months. According to the national RPI, home prices nationwide declined at a seasonally adjusted rate of 3.6% from a year ago. The year-to-year declines at the nation’s top housing markets, as indicated by the 30- and 10-MSA composites, have also decelerated to their slowest pace since May 2010.
Among the individual markets tracked by the FNC 30-MSA composite index, 10 markets show a positive month-to-month change in January that averaged about 0.5%. Among them, the Charlotte market records the largest one-month price increase of 1.9%, followed by Atlanta at 1.0%. Moreover, Charlotte home prices in recent months are showing signs of extended recovery, rising month to month for three consecutive months since November – averaging 1.0% per month or nearly 3.0% from November to January. Home prices are also rising in the Tampa market in the last three months (2.8% between November and January). Home prices in another Florida market, Miami, also have increased in the last two months, rising 1.2% in December followed by 0.5% in January. Of the remaining 20 markets where home prices fell in January, Houston, Sacramento, San Francisco, Detroit, and Columbus are among those that show the largest one-month price declines.
On a seasonally adjusted year-to-year basis, Denver and San Antonio are seeing home prices rising above a year ago, up 2.3% and 1.2% respectively. Although no longer declining in the double digits, Las Vegas, Atlanta, Sacramento, and Tampa continue to rank among the worst cities for existing homeowners whose property values are down 9.5%, 9.3%, 9.0%, and 7.7%, respectively, from a year ago.
Peak to date, 16 of the component markets in the FNC 30-MSA composite index continue to record more than 30% declines in property values; in eight of them, homeowners have lost more than 50% of the peak market value. Leading the declines are Las Vegas (62.7%), Phoenix (59.7%), Riverside (59.4%), Sacramento (58.9%), Orlando (57.2%), and Miami (54.9%). Meanwhile, home prices in five cities including Atlanta, Cleveland, Detroit, Las Vegas, and Phoenix have fallen below their January 2000 levels, down 14.0%, 6.9%, 26.8%, 16.1%, and 15.8%, respectively.
[1] The FNC National Residential Price Index is a volume-weighted aggregate price index consisting of 100 major metropolitan areas across different regions of the U.S. All FNC Residential Price Indices are constructed to capture unsmoothed home price trends.
[2] The procedures used to create the index are described in “Hedonic versus repeat-sales housing price indexes for measuring the recent boom-bust cycle,” by Dorsey, R.E., Hu, H., Mayer, W.J., and Wang, H.C., Journal of Housing Economics 19 (2), 75–93.
To interview any of FNC’s mortgage industry experts, contact:
Bill Dabney, manager of public relations
FNC, Inc.
Phone 662/236.8304
bdabney@fncinc.com
About FNC, Inc.
Since 1999, FNC has pioneered real estate information technology, automated appraisal ordering, tracking, documentation and review for lender and servicer compliance with government regulations. FNC’s platforms are in production at seven of the 10 largest U.S. mortgage lenders and provide value to large and small lenders with reduced costs and more efficient loan processing. With collateral management platforms, data and analytics, FNC provides advanced insight into the property backing a loan from origination to capital markets. Visit FNC online at www.fncinc.com.
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