FHFA House Price Index — Prices Still Falling in Miami and New York

posted on September 23rd, 2011 filed under: Financial Responsibility, Real Estate Market Data

According to the FHFA House Price Index, real estate prices are still falling in Miami and New York.

Keep your eye on the long-term trend line, which we warned long ago was our destiny.  At the time, that implied a potential 50% price decline for home values in Miami.  (Did any other real estate broker warn you about that?)

FHFA House Price Index -- Miami MSA -- 1Q1976 to 2Q2011 (NSA) -- with trend line

Home prices in New York have even further to go.  The New York real estate market remains one of the most overpriced in the country relative to income.

FHFA House Price Index -- New York MSA -- 1Q1976 to 2Q2011 (NSA) -- with trend line

At some point, property prices in Miami and New York could start moving sideways rather than down, and work off the remaining overvaluation as a function of time rather than price.  On the other hand, it’s also possible that prices overshoot to the downside — i.e., go below the long-term trend line before floating back up to it.  In any event, you should assume that the long-term trend is our ultimate destination.

Note: FHFA stands for the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, the government-sponsored entities that buy up most of the mortgages issued in the United States.  The FHFA House Price Index tracks repeat sales or refinancings of the same properties over time.

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posted by // This entry was posted on Friday, September 23rd, 2011 at 8:17 am and is filed under Financial Responsibility, Real Estate Market Data. You can follow any responses to this entry through the RSS 2.0 feed.

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